H-P: Trying to Close the Barn Door

H-PYet another Board of Directors is trying to close the barn door after the horse has run off. H-P announced that it was forming an informal committee to provide ‘strategic advice’ to Chief Executive Meg Whitman. Huh? This is a press announcement? A fairly lame response to the sordid affair around the $11 billion Autonomy Corp. acquisition, which was done under the aegis of Whitman’s predecessor, Leo Apotheker.

Turns out that Autonomy’s revenues were a tad ephemeral. Yes, another scandel that Sarbannes-Oxley (“SOX”) was supposed to prevent. How much does SOX cost H-P per year? Either not enough, or too much. According to John Bronte of Bronte Capital, detecting the fraud required a bit of knowledge of revenue recognition in a software company, a quick view of the balance sheet and simple arithmetic as to the receivables. He’s right. Apparently he has good company: the Financial Times, and other fund managers.

H-P’s management was distracted by the shiny object that urned out to be glass rather than diamonds. Autonomy designs software that alledgedly allows th user to make sense of and process unstructured ‘human information,’ and draw ‘real business value’ form that meaning. I think that means that if you type a question into a search bar, it serves up an answer that makes sense. It was a rocket ship until it flamed out in a dramatic fashion, most unfortunately long after the H-P deal closed.

The shiny new committee is composed of some interesting people, including Ralph Whitworth, co-founder of activist fund [as opposed to in-activist or passive fund?]  Relational Investors LLC, Marc Andreesen and Shumeet Banerji, senior partner of Booze & Co.  Meg will be hearing some interesting, though not necessarily relevant, perspectives.

Meg Whitman from H-P website
Meg Whitman
from H-P website

We respect Ms. Whitman for her moxie in taking the H-P CEO job.  H-P is a legendary company in SiliconValley, which long attracted the best and the brightest from its neighbor, Stanford University, and other top institutions.  While, H-P is deserving of all the criticism it has received, most of the damage was done in the previous decades, starting with Carly Fiorino in 1999.   John Young and Lew Platt were worth successors to David Packard and Bill Hewlett; Carly was not.

I can’t help but wonder if this lovely committee would have been formed had ‘Mark,’ as opposed to ‘Meg,’ Whitman was CEO.  It may come as a shock, but sexism does occur, especially at the top, even in Silicon Valley.  Actually, when I was a student at Stanford, I saw much more sexism than I ever saw in New York City.  But I digress.

Meg Whitman is displaying the right tenor and tone, we can only hope that she is making the right strategic decisions. H-P must to claw itself back into a position of some prominence and compete in the new solar system of technology companies as it launches Project Moonshot and other initiatives.