HP's Meg Whitman: 'we had to be straight' on Autonomy

Hewlett-Packard chief says firm had no choice but to blow the whistle on Autonomy, but defends the acquisition and rules out selling the UK technology firm

Autonomy's accounting improprieties were of such "magnitude" that Hewlett-Packard had no option but to blow the whistle in the wake of its disastrous acquisition of the British software firm, according to HP chief executive Meg Whitman.

The purchase of Autonomy led to an $8.8bn (£5.7bn) write-down at the world's largest maker of personal computers, sending its share price crashing to a decade low last November. Calling in regulators on both sides of the Atlantic generated a storm of negative publicity, capped by the resignation of HP's chairman and two board directors last week after a shareholder revolt. Nonetheless, Whitman defended the strategy, and ruled out selling Autonomy, in an interview on Wednesday.

"The magnitude of the accounting improprieties, the disclosure failures, the outright misrepresentations, was so substantial that there was not even an option to not be straight up about this, because we needed to explain to our investors, to employees, what had actually happened here," she said.

During a visit to the UK, where HP employs 20,000 staff, Whitman added that HP would redouble efforts to build a smartphone. The firm will also make more personal computers running on software designed by Google, reducing its traditional reliance on Microsoft's Windows operating system.

Having made her name turning eBay into an online retail giant, Whitman became HP's third leader in just over a year in September 2011. She replaced Léo Apotheker, who was forced to leave after less than a year in the top job, having paid $11.1bn for Autonomy and presided over a 47% share price decline.

Referring to the Autonomy deal, Whitman said: "With 20/20 hindsight, knowing what we know, now we paid too much." She was a member of the HP board before becoming chief executive of the company and was among the board directors who approved the purchase.

Autonomy staff were "unsettled" by the disclosures, she said, adding: "It has taken them a few months to rebuild their confidence. This was very hard on them." Some 500 staff remain at Autonomy's former headquarters in Cambridge, and Whitman said the division's revenues would begin to grow, albeit from a lower base.

She dismissed rumours the division might be sold: "We remain committed to this technology, we remain committed to Cambridge, we remain committed to the UK, we are going to grow this business." Autonomy founder Mike Lynch, who left the company last year, denies any wrongdoing and questions the scale of losses claimed against his business.

Total revenues at HP will not grow until 2014, Whitman has said, and it will rely on sales of selling servers, printers and software as well as improving its personal computing division, which is being overtaken by Chinese competitor Lenovo as the world's largest PC maker.

In a major strategic shift for HP, Whitman is to embrace software made by Google and use more silicon chip designs from the UK company ARM Holdings. In February HP relelased a cheap ($169) seven-inch tablet running on Google's Android software. This year it has also released its first laptop to use Google's Chrome interface.

"Windows is going to be a big part of what we do but there is no question that other [operating systems] – Android, Chrome – are becoming more important. It's not just PCs anymore, it's not just the Windows operating system anymore, it is a multi-OS, multi-architecture, multi-form spectrum."

Making every shape and size of computer will present a challenge to HP, given its failure so far to produce a best-selling phone or tablet. The company acquired smartphone maker Palm in 2010 for £1.2bn, used its technology to launch its now discontinued TouchPad tablet, then got cold feet and shut the business down a year later.

Whitman said she was determined to try again: "It's important for us because in many countries smartphones or whatever its next incarnation is may be the only personal computer device that many people have and since we're one of the leaders in this business I think we have to be there."

Having set out a five year turnaround plan, Whitman said she would carry out her transformation in the public eye, unlike rival Dell, whose founder is hoping to take the company off the stock market in a private equity deal.

"Yes we are under scrutiny from investors and from the press but the current shareholders of HP ought to be able to take advantage of this turnaround. The challenge of course is when you take the company private all your existing investors don't get a chance to be part of that turnaround."


Juliette Garside

The GuardianTramp

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