CEO Meg Whitman on the future of Hewlett-Packard
Meg Whitman during a campaign party for governor on Nov. 2, 2010 in Universal City, Calif. Whitman became the CEO of Hewlett-Packard in 2011.
Hewlett-Packard reported quarterly profits today. They were lousy, but that's not really the headline.
The company had to take a nearly $9 billion writeoff on an acquisition it made a year ago. HP says it thinks there were accounting discrepancies at Autonomy, and that it has asked the SEC to look into things. To make matters worse, HP's trying to find its way in a high-tech world that's moving past printers and PCs.
Meg Whitman, the CEO of Hewlett-Packard, joins us for the latest Corner Office interview.
On today's announcement by HP of "serious accounting improprieties" by its acquisition, Autonomy Corporation:
Ryssdal: Well, let's talk about the big one. This Autonomy loss, the "accounting discrepancies," as you say. What you carefully have not said is fraud. Were you guys lied to?
Whitman: Certainly there were very serious accounting improprieties, disclosure failures and outright misrepresentation on the part of some Autonomy employees that was designed to inflate the underlying financial metrics of their company when they were a publicly held company before HP bought them. As you know, we've turned this matter over to the SEC as well as the Serious Fraud Office in the U.K., and I'll leave it to them to characterize exactly what went on here.
Ryssdal: You were on the board of HP at the time -- you were not the CEO -- but you were on the board. Where does responsibility lie within HP for this -- one can only call it, a disaster?
Whitman: So listen, HP's board is very disappointed. We feel terrible about this. I'm sorry I voted for this acquisition. But what I will tell you is we relied on audited financial statements by Deloitte, which is not exactly "brand X auditor." Right? It's a very well-known company and who would have dreamed that the financial reports did not have integrity as we expected? So listen, as I said, we've turned this over to the SEC and the Serious Fraud Office and we will seek redress among the parties that did this to recoup what we can for the HP shareholders.
On Whitman's plans for the HP's future in tech:
Whitman: HP is in the middle of what I'd characterize as a five-year turnaround. We are one year into that turnaround. We've got challenges in the middle of our major business, but we've got some bright spots too...
Ryssdal: You have talked in the fairly recent past about wanting to get HP back to where it started -- that is, innovating and driving things in the world of high-tech...Where will the innovation at your company come from? What are you going to do?
Whitman: The innovation is broad-based. First of all, some people say HP doesn't have much innovation left. I would say quite the opposite now having been the CEO for a year. Innovation is alive and well at HP, we need to do a better job of bringing that innovation to market faster...There's a lot of innovation going on here, whether it's in our software-defined networking technology; whether it is our storage business; whether it's our Generation 8 servers, which are the most self-reliant servers in the world; and our upcoming Moonshot servers, which use a lot less power and a lot less space; to a number of our software initiatives around security -- and frankly, also Autonomy. We have a lot of confidence still in the Autonomy software, and obviously if we knew what we knew now, we wouldn't have paid as much for it, but the business, the underlying business, I think, and the technology is very strong.
How Whitman defines HP:
Whitman: HP is the largest information technology company in the world that provides hardware, software and services to organizations of all sizes and has a big consumer business as well. What we do is we try to provide enterprise needs better than anyone else and deliver the hardware and software and services that those enterprises need. And put together a series of devices that customers want as well for their printing and personal systems needs.
On Whitman's failed run for governor of California in 2010:
Ryssdal: I can't help but notice the job you, in essence, applied for before the HP job -- that is to say governor of California -- looks a lot more fiscally promising right now. We're talking about budget surpluses here, and you guys, you're having some tough times. Do you ever wish you had it back to do it over again?
Whitman: Ah, no. I will tell you: I think HP is in actually quite good financial -- many people say, kind of like what you're implying, that this is not a good financial situation. I just need to reiterate: We generated $10.6 billion worth of cash in 2012; $4.1 billion in Q4 alone. We have $120 billion worth of revenue. This is a very big, profitable company. We want it to be bigger, we want it to be more profitable, but this is the 10th largest or 11th largest company in America, with a very robust cashflow.