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

Stocks in this article: HPQ

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.

HP CEO Meg Whitman

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.

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