Amid the losses racked up by Hewlett-Packard in the third quarter of 2012, there was a glimmer of upside, including an increase in revenues related to software. HP executives suggested that Autonomy, HP’s big bet on Big Data, is apparently in need of improvement.
HP took an $8.9 billion loss in the quarter, down from a $1.9 billion gain in the same quarter last year. Much of that hit was due to the $8 billion write-down associated with Electronic Data Systems, a tech-services vendor acquired by HP in 2008. While then-CEO Mark Hurd intended EDS to help HP battle toe-to-toe with IBM’s services offerings, the unit failed to deliver on that promise. HP warned investors earlier in August about the EDS fallout.
Meanwhile, revenue for HP’s Personal Systems Group (PSG), Image and Printing Group (IPG), Enterprise Servers, Storage and Networking (ESSN), and technology services all declined.
But revenue related to software grew 18 percent year-over-year. That included growth in licensing, support, and services offerings. More importantly for HP, Autonomy—acquired for $10 billion by former CEO Leo Apotheker shortly before his departure—isn’t turning out to be an EDS-style flop, even if HP declined in its earnings statement to break out specific performance numbers.
“We have a lot of work to do over the next several quarters to improve Autonomy performance,” Cathie Lesjak, HP’s CFO, said during the company’s Aug. 22 earnings call to discuss the results, “and we will be focused on improving pipeline conversions and execution across the entire Software business.”
Autonomy relies on proprietary technology to analyze massive amounts of structured and unstructured data for meaning. Its products range from data archive and e-discovery tools to intelligent process automation. Customers include EMC, Sybase, and Adobe.
HP has little choice but to continue investing in data analytics and business intelligence, considering how its rivals have displayed a keen interest in bulking up their own data offerings. IBM recently purchased Vivisimo, while Oracle acquired Endeca—just two of the deals being made by tech giants seeking a strong B.I. platform.
And it’s clear—at least based on the comments from the earnings call—that HP intends to stay in that fight. The question is how Autonomy will adjust to meet the needs of what’s become a burgeoning market for data analytics and B.I.
“HP is still in the early stages of a multi-year turnaround, and we’re making decent progress despite the headwinds,” Meg Whitman, HP president and CEO, wrote in a statement accompanying the earnings. “During the quarter we took important steps to focus on strategic priorities, manage costs, drive needed organizational change, and improve the balance sheet.”