Whitman says HP '100 percent committed' to Autonomy products

IDG News Service - Hewlett-Packard CEO Meg Whitman has moved to reassure customers that the future of its Autonomy product line is safe, a day after HP disclosed an alleged accounting scandal at the company it acquired last year.

"We remain 100 percent committed to Autonomy and its industry-leading technology," Whitman said during a webcast for Autonomy customers on Wednesday.

Whitman and other HP executives said HP will continue to invest in and support Autonomy's products, which include tools for data analysis, archiving and backup, as well as for Web content management.

"We continue to have high expectations for this business," said George Kadifa, the executive vice president in charge of HP software.

Whitman also hosted a call earlier Wednesday for the employees in its Autonomy division, to prop up their morale after the accounting problems HP disclosed Tuesday.

HP was "terribly worried" about how the scandal would affect the employees, Whitman said. "How would you feel? You would feel abandoned and cheated," she said.

"What we said is, 'This is not your fault. Even if you are in the finance department this is not your fault, because this was the result of a willful effort on the part of a small number of Autonomy employees."

HP dropped a bombshell Tuesday when it revealed that Autonomy had allegedly been cooking its books before HP bought the company last year for US$10.3 billion. Autonomy's former management denies the charges.

According to HP, Autonomy took steps to make the company look more profitable than it really was, including selling software into its channel even though there were no end customers to buy those products. It also allegedly booked some low-margin hardware sales as higher-margin software sales.

As a result of the alleged fraud, HP booked a charge of $8.8 billion against its profit last quarter, about $5 billion of which was to better reflect the true value of Autonomy.

On Wednesday, Whitman also sought to reassure HP's customers about the company's finances. Despite booking a huge loss for the last quarter, HP generated more than $4 billion in cash flow from operations, she said, part of which was used to pay down HP's debt.

"You should feel quite reassured about our financial position," she said.

HP ended the last fiscal year with $21.8 billion in long-term debt.

Many of the questions customers asked on the webcast had to do with HP's plans for Autonomy products moving forward. When will HP articulate a detailed product road map for Autonomy? one customer asked.

Autonomy had about 50 products in five categories, Kadifa said. "This is something we expect to start sharing with customers in the first half of next year," he said.

Another customer asked about HP's plans to "right its ship."

"I've already made some big changes," Whitman said. "Mike Lynch and his entire senior management team is gone," she said, referring to Autonomy's former CEO. He was asked to leave HP earlier this year after "substantially missing his numbers," Whitman said.

Another customer wanted to know if the problems with Autonomy stemmed from a "failure of due diligence."

"I don't think so," Whitman replied. The purchase was overseen by HP 's previous management, she said -- though she acknowledged being on HP's board at the time and voting for the transaction. The auditing was handled by Deloitte, she said, "not exactly a Brand X auditor."