Hewlett-Packard Layoffs Aren't the Bad News: Opinion

Dana Blankenhorn

NEW YORK (TheStreet) -- A lot of people are going to be obsessing today over Hewlett-Packard's(:HPQ) decision to lay off about 27,000 people amid slumping profits.

Some analysts are actually calling it a bullish signal.

Some analysts are fools. Because the layoffs aren't the real bad news.

The real bad news is that Mike Lynch, founder of Autonomy, upon which Hewlett-Packard lavished $10.3 billion just last year, is leaving the company.

Even that's not the worst news.

"It's not just Mike," one source told the The Guardian, which reported that other executives had left Autonomy.

The source said the problem was a "clash of cultures," with Hewlett-Packard's large size conflicting with Autonomy's nimbleness.

So Lynch is not just cashing out. He and his team appear to be bugging out because of HP's bureaucracy, and that should alarm shareholders.

This is the real insanity of today's HP. Here HP has a successful company that it just paid billions for, and it throws so many idiots in front of that company's top managers that they leave en masse, at just the time when they're most needed to help engineer the parent company's turnaround.

Fact is, if HP is going to have a comeback it has to come through cloud, and Autonomy was its chief asset in addressing that opportunity.

Autonomy was a leader, not just in "big data," but in bridging the gap between data intelligence and human intelligence, in making sense of big data.

Sure, it's possible some California executive can fly in and get things working and that some hotshot salesman can talk more companies into trying the software.

But software is constantly under development, its direction constantly under review. And now the human intelligence that made Autonomy humanly intelligent is out the door.

To me it's just one more indication that HP CEO Meg Whitman is going to fail at this job as spectacularly as predecessor Carly Fiorina, who put the "Q" in the company's stock symbol by buying Compaq early in the last decade.

Fiorina's mistake was to assume that the way to deal with industry consolidation was to buy the weaker players. Whitman's is to believe that you can cut your way to success and that only the CEO should take the credit.

You don't throw bureaucrats at successful entrepreneurs expecting them to stay. You throw bureaucrats at them in order to run them off, and assure that the success that comes next will be all yours, not theirs.

It's small-minded, it's petty and it's beyond stupid. It's how big companies fail.

It's true that Whitman built a good company in eBay(:EBAY), at least for a time. She started with that company when it was quite small and left after it got to be a fraction of the size HP is now.

Why anyone thought she could engineer a turnaround at a much larger company is beyond me. She has no track record with turnarounds.

From what I can see of her resume, she is far more about Meg Whitman than she is about anyone else in the world. This kind of aggressive egoism may be fashionable among the vulture capital set, but at the end of the day what generally happens is the operation is a success, the patient dies, and the doctor performs a complete "cashectomy," the removal of all funds from the patient.

HP hasn't been the company that Bill Hewlett and David Packard built since at least as far back as 1999, when the instrumentation unit was spun out as Agilent(:A).

It may have lost its way even earlier, when it became a manufacturer of PCs and printers rather than an engineering company.

Based on what I'm seeing, HP is going the way of Silicon Graphics, Wang Labs, Data General and all the other great names of computing's past that couldn't or wouldn't adapt to change and finally disappeared.

Meg Whitman is killing HP.

At the time of publication, Blankenhorn had no positions in stocks mentioned.