HP's CEO, Mike Lynch, to Depart After Struggling Autonomy Sales
In a recent financial report, Hewlett Packard (HP) announced a 3% decline in revenue for the first quarter of the financial year, down to $30.7 billion. The tech giant also reported a 31% year-on-year drop in net income to $1.6 billion.
HP's CEO, Meg Whitman, attributed the decline to challenges in scaling operations, particularly at Autonomy, a business intelligence and search solutions provider that HP acquired for $11 billion in 2011.
Following the disappointing quarter, Mike Lynch, founder of Autonomy, has announced his departure from HP. Bill Veghte, HP's chief strategy officer and executive vice president of HP Software, will take over leadership of Autonomy to improve its performance.
Critics have been openly critical of Autonomy's acquisition strategy, with some stating that the company has acquired businesses with little in common. Much of Autonomy's growth was driven through acquisitions, including Verity in 2005, Zantaz in 2007, and Interwoven in 2009.
Whitman, however, insisted that the market and competitive position for Autonomy remains strong, particularly in its cloud offering. She also confirmed a job cut of 27,000 employees, representing 8% of HP's workforce, by the end of 2014. The cost-cutting initiatives and job cuts are expected to save the company between $3 billion and $3.5 billion annually, starting from 2014.
The majority of the savings will be reinvested to prioritize organic opportunities across the business, particularly in the areas of cloud, security, and information management. HP also aims to implement new sales processes, improve interface with services, servers, storage, and networking business, and establish a new organizational structure to support a $1 billion-plus company.
Nick Patience, director of product strategy at legal document management vendor Recommind and co-founder of analyst company The 451 Group, questioned the validity of Autonomy's offerings following Mike Lynch's departure. The new leader appointed as CEO of Autonomy is João Diogo Falcão, a company co-founder and CTO who stepped into the CEO role to ensure continuity and accelerate the company's mission.
The changes at Autonomy come as HP continues to navigate challenges in the competitive tech market. The company is focusing on strategic initiatives to drive growth and improve profitability in the coming quarters.
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