HP Praises Channel, Sets Up Autonomy-EDS Investigative Committee

Hewlett-Packard CEO Meg Whitman used Wednesday's HP shareholder meeting to talk about the need to right the company's financial model and said its indirect channel partners are key to growing the company.

HP, in response to a shareholder's question, also confirmed reports that it has set up a special committee including three of its directors to investigate issues surrounding the contentious acquisitions of both Autonomy and EDS.

Shareholders at the meeting also approved the existing slate of 11 directors on the company board and rejected shareholder proposals related to the company's human rights record and a potential requirement for HP's top executives to retain a significant number of HP shares as a way to encourage them to make less-risky decisions.

[Related: HP Q1 Revenue, Earnings Fall, But Prospects Grow On Channel Strengths ]

However, a call by former Autonomy CEO Mike Lynch to press the board with questions about HP's allegation of fraud in relation to HP's blockbuster $10.3-billion acquisition of Autonomy fell on deaf ears.

In response to a question from a representative of the Service Employees International Union (SEIU), a major HP shareholder, John Schultz, executive vice president and general counsel at HP, confirmed that the company has appointed a special committee to investigate issues related to the acquisitions of software developer Autonomy and systems integrator EDS.

Included on the committee are HP Directors Ralph Whitworth, Gary Reiner, and G. Kennedy Thompson.

Schultz said the committee retains counsel to assist with the process, and said it will be independent to meet legal requirements.

The SEIU representative protested the inclusion of Thompson because of conflict of interest related to the decision to acquire Autonomy, calling it a "grave concern."

Surprisingly, that was the only mention of Autonomy during the meeting despite on-going legal and financial issues related to the acquisition.

Calls prior to the shareholder meeting for rejecting the reappointment of directors involved in the decision to acquire Autonomy, as well as to reprimand Chairman Ray Lane for his role, went unheeded.

Whitman, as part of her presentation on HP's financial condition, said the company is focused on innovation to help solve customers' IT issues and committed to taking advantage of the scalability offered by HP's size and its wide range of products and services.

"We can reach our customers and partners in any corner of the world," she said.

NEXT: Whitman Counting On HP Innovation, Channels

HP last year spent $3.8 billion on R&D, and was awarded 1,300 patents in 2012, making it No. 15 worldwide in terms of patents awarded during the year, Whitman said. "But we have to got to do more to ... bring those innovations to market," she said.

HP also reported almost $120 billion in revenue in 2012 and was profitable, but saw room for improvement, Whitman said.

"We have to get revenue growing again," she said. "And we have to get the right financial model in place."

That will require a renewed focus on both direct sales at the very top of the enterprise market as well as on its extensive channel partner community, Whitman said.

"And most of all, we need to better connect with our partners," she said. "Somewhere along the way we lost it, and we need to rebuild it. ... Partners are crucial to our future, and we need to embrace them like we never did before."

Rich Baldwin, CIO and chief strategy officer at Nth Generation Computing, a San Diego-based solution provider and HP partner, told CRN in an emailed response about Whitman's comments that he believes she is sincere about her desire to embrace channel partners.

Baldwin wrote that Nth was part of a small group of solution providers that held a roundtable discussion with Whitman and several other HP executives.

"I brought up several issues that were affecting our profitability as an HP partner both in ISS [industry standard servers] and storage. In November less than a month later, she fixed the problem with ISS that paid all channel partners 5% more on VEP [value express pricing] for ISS product lines. At the beginning of HP Q2 she fixed the problem with HP new business registration related to storage that now pays us 5% on all new 3PAR sales regardless of selling price or discount vehicle," he wrote.

PUBLISHED MARCH 20, 2013

This story was updated on Wednesday, March 20, 2013, at 5:34 p.m. PST, to include comments from Nth Generation Computing's Rich Baldwin made after press time.