HP Tries to Stem Autonomy Exodus after Founder Goes

26 May 2012, 9:38 am EDT

(Reuters) - Hewlett Packard Co has told staff at Autonomy they have a bright future even after founder Mike Lynch was shown the door on Wednesday, joining a long line of top managers to leave the Cambridge-based software maker since HP bought it last year.

HP Chief Executive Meg Whitman said the group was committed to the success of Autonomy, bought by the world's No. 1 personal computer maker for more than $11 billion.

Autonomy has taken some of the blame for last quarter's disappointing performance at HP's software division, which fell short of HP's expectations.

Whitman said in an email ahead of speaking to staff yesterday that it was "always hard when a charismatic founder, who has built a great company leaves."

But Autonomy staff had a "very bright future" aft HP, she said. "While this will be a journey, I am confident we can do it together and I am committed to your success."

The Silicon Valley giant has stressed that Lynch's departure was down to the division's poor performance rather than the notion that Autonomy had no place in HP's corporate culture.

"There was a miss on the numbers," a HP spokesman said. "There's a discipline about financial responsibility for senior leaders in any organization. It was about bringing the executional skills to the business."

Some 15 to 20 percent of employees, about 250 people, had already left Autonomy since the deal was announced last August, including the chief financial, marketing and operations officers, said an Autonomy executive, who declined to be named.

Lynch, who had previously said Autonomy had a bright future within HP, will be replaced by HP's chief strategy officer Bill Veghte.

It is difficult to break out Autonomy's contribution to HP, but HP's software division revenue of $970 million in the second quarter of this year was lower than combined revenue of HP's division and Autonomy's a year ago.

HP said there had been a slowdown, although it was not an like-for-like comparison due to U.S. accounting rules, different revenue recognition timeframes and the shift to cloud computing, which delivered revenue over a longer period.

The Autonomy executive said it was not clear whether the shortfall was in the legacy HP products or in Autonomy products.

"Autonomy hadn't missed its quarterly earnings in 47 quarters or so, the fact that the second quarter was perhaps not as smooth is an indication that settling into the new processes was quite difficult," the person said.

Panmure Gordon analyst George O'Connor said HP had struggled with software, not just around Autonomy but in other sides of its software suite as well.

The Autonomy executive said there were problems in handling all the sales leads that were coming in. "We have had to do things the HP way and the HP way has proved to be cumbersome in getting deals done in time," the executive said.

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