If HP investors were expecting Meg Whitman to produce a miracle at HP and turn the company around in 12 months, then last night’s earnings call will have disappointed. The hardware-software giant announced a Q3 loss of US$ 8.9 billion -- its biggest quarterly loss in its history with Autonomy dragging on an already poor performance for hardware sales.

HP Job Losses, Write-downs

However, Whitman insists that everything is on track and that what we’re seeing at the moment is the early stages of a turnaround that will see HP back where it belongs in the long term. She warned, though, that it wouldn’t be easy, a fact the 4000 people that lost their jobs in restructuring over the past year will testify to.

Before looking at the information that was given about the performance of its US$ 11.7 billion acquisition last year, let’s take a quick look at some of the figures.

In a pretty weak global economy, HP hasn’t done as well as some of its counterparts, who have also been suffering from weak demand, but have still been able to push the bottom line in the right direction.

The month started badly enough for investors when earlier on HP announced that it would be posting a bigger-than expected charge in the third quarter in relation to its workforce reduction plans. The idea is that 27,000 people worldwide would go, and with four thousand gone over the year, the costs of this look pretty steep, although figures on this are not available.

A further 11,500 are expected to leave the company in fiscal year 2012 -- which ends at the end of October -- as opposed to the 9,000 that HP had originally announced. Another 15,500 employees will be let go through October 2014.

Also in this quarter -- and the reason behind the US$ $8.9 billion loss it announced for the quarter -- are the plans announced to take an $8 billion charge to reflect the shrinking value of Electronic Data Systems, a technology consulting service it bought for US$ 13 billion in 2008.

Third-Quarter Revenues

Overall, revenue for the third quarter fell 5 percent year over year to US$ 29.7 billion, US $500 million less than analysts had expected. Without the write-downs and other once-off costs, though, HP did OK in a very sluggish market.

Profits without these costs would have been US$ 1.97 billion, down 9 percent year over year, but in keeping with what’s happening in the wider global market as businesses in many geographies hold off on spending until the direction of the global economy finally becomes clear.

Another highlight was that software sales rose 18 percent to $973 million, driven by last year's acquisition of Autonomy, even if licenses grew by only 2%. Software-related support revenue was up 16 percent and software services rose 65 percent.

The PC market also remains weak, with PC revenue down 10% year-over-year, driven by this weakness and an aggressive pricing from competitors, Whitman said. She added:

The reality is we're locked in serious, competitive battles, but we're determined to win. We will fight to sustain our leadership position, particularly in the Commercial space, while remaining focused on profitable growth. To this end, we are executing targeted marketing and promotional programs to support the business in Q4.”

Autonomy, HP

For information management professionals -- and for the financially bloody-minded -- the real interest in these figures was what has happened with Autonomy; after all, while HP did spend a huge whack of money to buy it, it did buy one of the more interesting products in the information management space with IDOL.

It's old news at this stage, but worth recalling that since it was bought, Autonomy hasn’t had an easy time in the HP stable. News that it had been acquired by HP had only just been digested when reports started leaking out of mass defections of some of its brightest talents from Autonomy to… well it’s still not real clear where they went.

Then in May, Mike Lynch also fell foul of US corporate culture and also departed, leading to speculation, which is still rife, that he would set up an IT start-up fund, and take a lot of the original Autonomy staff back into the fold.

Again, none of this has been confirmed, but what is clear is that Autonomy has dragged on HP since it was bought. In the earnings call for Q3, Whitman had this to say:

Autonomy still requires a great deal of attention, and we've been aggressively working on that business. Among the many changes we've instituted is a global dashboard to track Autonomy's pipeline, a single global sales methodology, a single HP services engagement process and a global process to measure client satisfaction and service delivery progress. These actions are designed to help deliver predictable results and improve after-sale customer satisfaction… Overall, we have a very long way to go, but we are taking steps to fix the problems and help Autonomy succeed.”

Autonomy’s Future?

She also said that Autonomy had reached an important customer milestone with Autonomy LiveVault, its cloud-based data protection service for content archiving passing the 10,000-customer mark during the quarter.

There was also significant restructuring of the company with several executive moves to help strengthen HP's leadership bench and support its turnaround. Bill Veghte was named Chief Operating Officer, with responsibility to further accelerate the execution of the company's strategy.

It is not clear here whether this ‘restructuring’ is the result of Lynch leaving, or if it is the reason Lynch left in the first place. Neither is it clear whether the customer-wins are genuine HP wins, or just the result of the momentum that Lynch built up at the helm of Autonomy.

If it’s the former, then it augers well for Autonomy in the coming months, while if it’s the later, what remains to be seen is what will happen now that Lynch is gone.

Not that HP has been sitting on Autonomy; there have been some really interesting product news from the HP-Autonomy combo over the year and HP paid far too much to let it just grind to a halt.

The next quarter should produce some interesting figures from HP that will give a better view of the company once the write-downs have been taken out of the equation.