December 04, 2012, 10:27 AM — Hewlett-Packard CEO Meg Whitman has once again affirmed the company's commitment to its embattled Autonomy software division, stressing that HP's fiscal health is stronger than recent developments may have suggested.
"It's been a quiet year, not much going on at all," Whitman said ironically in a keynote address Tuesday at the HP Discover conference in Frankfurt. "Holy smokes! There's been a lot of challenges, but a lot of victories. I want to thank you for sticking with us through some difficult times."
Whitman was alluding in part to HP's recent announcement that it would take a US$8.8 billion write-down, associating about $5 billion of it with alleged accounting improprieties by Autonomy before HP acquired it last year for $10.3 billion in a widely criticized deal.
"We remain 100 percent committed to Autonomy's industry-leading technologies and its employees," Whitman said in Frankfurt. Autonomy "will play a very significant role in our growth strategy moving forward," she added.
Autonomy, which sells information management and search software, hasn't performed as well as HP and the market hoped. But Whitman, who took over the CEO job last year following the ouster of Leo Apotheker, is also grappling with a weakened stock price plus falling sales in servers and services as the company tries to reorient itself around a three-pronged strategy centered on cloud computing, information management and security.
Still, HP is in a stronger position than some may believe, according to Whitman. "We remain the number-one or number-two provider in virtually every market in which we compete," she said.
HP is also "quite profitable," Whitman said. "Everyone in this room knows that cash flow is the lifeblood of business."
While the Autonomy write-down resulted in a $6.9 billion loss in HP's most recent quarter, it was for impairment of goodwill, which refers to the value inherent in a company's brand name and market perception, not cash. Whitman's remarks about profitability apparently referred to HP's non-GAAP (generally accepted accounting principles) results, which allow the exclusion of one-time charges like the Autonomy write-down.
HP has also aggressively reduced its debt in recent quarters, Whitman said.
But for most of her talk Tuesday, Whitman focused on redefining HP's role in the tech industry and its customers IT environments.
"IT is the engine that powers the enterprise and often redefines the enterprise when all these changes are taking place," she said. "What's emerging out there in my view is an entirely new style of IT. This new style is driven by cloud and by big data. This new style of IT promises lower cost, and increased agility."