Hewlett-Packard, despite problems with some high-cost and high-profile acquisitions, will continue to buy companies to grow its capabilities, according to CEO Meg Whitman.
In a televised interview Aug. 22 on CNBC's "Squawk on the Street" show, Whitman said the company would stay away from the massive multibillion deals it's made in the past, focusing instead on smaller acquisitions up to $1.5 billion to help fill out its broad product portfolio.
HP's acquisition strategy came into question last year after the company was forced to take an $8.8 billion write-down from its $11.3 billion purchase of software maker Autonomy in 2011. The write-down came after accusations of accounting irregularities at Autonomy, and only a few months after HP took another $8 billion charge in connection with its $13.9 billion acquisition of services vendor EDS in 2008.
Whitman said the company has learned from past mistakes and that executives would be careful in their decisions moving forward.
"We understand that we have a legacy of some acquisitions that didn't work out very well, so we will be very judicious, very deliberate, [and] make sure that [future purchases] are very strategic and that we don't pay too much for these acquisitions," she told the CNBC hosts.
Whitman did the interview a day after the company announced quarterly financial numbers in which revenues dropped from $29.7 billion last year to $27.2 billion, though the company earned $1.39 billion. The PC business continued to suffer, and the Enterprise Group—which includes servers, storage, networking and technical services—had what she called a "disappointing" quarter, prompting the CEO to bring in a new lead executive for the business.
She reiterated that HP is in the second year of a five-year turnaround plan, and that despite the past quarter, "we're right on track."
At the same time, she noted that HP has done well reducing costs and managing its cash—the company had about $13.7 billion in cash at the end of the quarter, according to Executive Vice President and Chief Financial Officer Cathie Lesjak—giving the company some room to maneuver regarding acquisitions. Whitman said that large organizations need to make acquisitions, and that the key is to make ones that fit with their business goals, which for HP means in such areas as cloud computing.
"I think now acquisitions will be a part of our future to further some of our strategic initiatives and shore up some of the product holes and maybe some of our businesses," she said. "I don't want to do it just to buy growth. I want to do it to further the strategic position in the marketplace for HP."
Whitman said she also wants to ensure that as HP buys other businesses, officials also optimize the products and technologies the company already has in-house.
Her comments echoed similar ones she made during an Aug. 21 conference call with analysts and journalists to discuss the quarterly financial numbers. During the call, she noted the past problems and said the company would steer clear of similar situations.
"We will be incredibly measured and disciplined," Whitman said. "We are very mindful of the event that we just came off with Autonomy, so don't worry about that. We are very focused and disciplined, but I think as we see these big tectonic plate shifts, there is no question that acquisitions are going to have to be a part of how we turn this company around."
They just won't be on the same scale as Autonomy or EDS, she said during the CNBC interview.
"We don't need a 5 or 6 billion-dollar acquisition," Whitman said. "I think there are acquisitions in the 100-300 million-[dollar] range, maybe up to a billion-and-a-half, [that] we might be interested in."