Mobility News

HP Partners To Whitman: Please Reconsider PSG, Autonomy Moves

Kevin McLaughlin

The majority of HP channel partners contacted by CRN believe that new CEO Meg Whitman is a better choice to run the company than ex-CEO Leo Apotheker. That said, some partners are concerned that Whitman has already pledged her support for some of her predecessor's most unpopular decisions.

Whitman has endorsed HP's $10.3 billion bid to acquire U.K.-based Autonomy, which represents roughly 10 times revenues and 25 times earnings, as well as HP's mulling of a spin-off or sale of its Personal Systems Group. Although Whitman plans to review these initiatives in more depth, she has also made it clear that she agrees with the moves.

"From what I know now, I think the strategy is right and the initiatives we undertook on August 18 are right," Whitman said of the moves in a conference call with Wall Street analysts last week.

Although Whitman said she's committed to PSG and will push for a speedy decision on its future, she also didn't rule out a potential sale of the $42 billion business unit. That's the scenario many HP PSG partners have been dreading since the Aug. 18 announcement.

"History says Meg Whitman is brilliant and has done great things. But I would be much more bullish on her if she didn't just come out and endorse the status quo," one HP partner told CRN on condition that he not be named.

HP appears to be leaning toward spinning off PSG as opposed to selling it, but several partners told CRN they would've felt more confident about the situation if Whitman had taken the PSG sale option off the table.

Todd Swank, vice president of marketing at Burnsville, Minn.-based system builder Nor-Tech, believes that HP retaining PSG would be the best course of action. "Most of us in the channel want to see HP be more competitive with Apple and other device manufacturers that are coming up and taking a lot of our bread and butter business, and HP taking a step in that direction would be a positive," he said.

Meanwhile, HP partners are perplexed by Whitman's endorsement of the Autonomy bid, which has also attracted more than its fair share of criticism from shareholders. At $10.3 billion, HP's Autonomy bid represents nearly one fourth of the Palo Alto, Calif.-based company's $45 billion market capitalization.

"It's mind-boggling and just seems so expensive. It's great technology, but the return on investment pressure is going to be huge," said one HP partner, who asked not to be named.

An HP spokesperson contacted by CRN Monday declined to comment on partners' criticisms of the PSG and Autonomy moves. But in last week's conference call, Ray Lane, executive chairman of the HP board, explained that the Autonomy could help make HP a leader in unstructured information management.

Next: Why HP Partners Oppose The Autonomy Bid

"With Autonomy's enormous success and enormous profitability and synergies we can gain, we think we can build a helluva business out of it," Lane said in the call.

Daniel Duffy, CEO of Valley Network Solutions, a Fresno, Calif.-based solution provider, understands the rationale behind acquiring Autonomy but doesn't think now is the time for HP to be making a move of such magnitude.

"This is a company that has no business spending money or attempting complex, strategic acquisitions," Duffy said. "They need to first get their house in order, and restore customer and channel confidence."

It's unclear if HP could reverse course on its Autonomy bid even if it wanted to, although the deal has yet to be approved by Autonomy shareholders.

In any event, HP partners are willing to give Whitman the benefit of the doubt when it comes to supporting the channel, but given the tumultuous departures of Apotheker and ex-HP CEO Mark Hurd, one VAR told CRN he thinks Whitman will have a "short window" of time to restore partner confidence in HP's leadership and products.

"I'd give it one to two quarters before you have cause for partners to start looking around to work with another company," said one HP solution provider who didn't want to be named. "I don't think you'll see [partners] abandoning HP, but you will see cause for them to look around for alternatives."

In the meantime, HP partners are once again getting used to having a new CEO. It may take a while for Whitman to calm the waters, but for now, partners are simply happy to see anyone but Apotheker at the helm.

"I don’t know if Whitman is the right candidate, but I don’t think she can be any worse than Apotheker, so at this point all we can do is give her a little time to get up to speed and take a swing at things," Duffy said.

Chad Berndtson contributed to this article.