Jump to content
Objectivism Online Forum
Elle

Carly Fiorina leaves CEO position at HP

Rate this topic

Recommended Posts

Carly Fiorina has been one of my business heroes for awhile now and I was surprised to learn that she is no longer the CEO of Hewlett Packard as of Wednesday. Among the many things being thrown around by the media pundits there are:

-criticisms by "experts" of Fiorina's "exorbitant" demands for her severance package (at least $21.2 MM)

-"Fiorina executed the Compaq merger "in a superior fashion", but didn't have the right execution skills to lead the company forward, Dunn said. HP shares rose more than 10% following news of Fiorina's departure."Source

I am just curious what other people in business, or following this latest development in the business world, think of the entire scenerio? I haven't read all the news on this yet - but it seems very unclear exactly why she was dismissed by HP (the common tune is that she wasn't leading the company forward - which I'm not sure I buy as of yet).

Another question, who will replace Fiorina as CEO of HP? And where is Fiorina headed now?

Share this post


Link to post
Share on other sites

I'm curious why Carly Fiorina has been a business hero of yours.

When she took over HP, I read a bit about her and how she came from Lucent which was struggling. I've always assumed she jumped from Lucent before she could be blamed for its failures. However, this has just been a personal opnion based on limited reading, so I'd be curious as to the reasons you think she's one of the "good guys".

Share this post


Link to post
Share on other sites

From what I can understand, I think it was a silly and rather costly mistake for Fiorina to push forward in the Compaq deal.

(the following is from thestreet.com)

Fiorina, of course, lost her job as chairman and CEO of Hewlett-Packard (HPQ:NYSE - commentary - research) Wednesday, amid growing dissatisfaction with her performance. H-P's stock is worth about half of what it was when Fiorina took control of the tech giant in 1999. Not only that, but the company's 2002 merger with Compaq -- a deal that Fiorina championed in a close and bitter proxy contest -- has failed to live up to Fiorina's promises for it.

(end quote)

Compaq as a company wasn't doing well to begin with and honestly it was probably (I cannot know for sure but within my limited experience) a silly buy. The reasoning behind this is that at the time within the world of computer geeks (see: me) Compaq had no cred. as a producer of good computers. HP would have probably been better of simply "going it alone" and manufucturing their own machines-- and offering their own helpdesk support.

If a company looses half its value in such a short period of time (and I am keeping the dip of 2002 in mind) it seems only necesary and right that she should pay for her mistakes.

(this is the edit)

9/20/2004

(the street again)

Just over a month after Hewlett-Packard (HPQ:NYSE - commentary - research) blindsided Wall Street with a stunning two-quarter earnings shortfall, the Palo Alto-based giant is aiming to regain investor confidence by buying back billions worth of its own stock.

The company said Monday it expects to buy back $2.1 billion in stock during the fiscal fourth quarter, amounting to a hefty 4% of total shares outstanding. The repurchase will likely use up the remaining buyback authorization approved by H-P's board in May 2004.

Edited by PennDrago

Share this post


Link to post
Share on other sites

My take on it was that she was part of the fall out of over regulation imposed since Enron. Not to mention she was a woman and had a double burden of extra media following her every move since she is one of the highest powered women CEO's, so she had alot going against her. Not that it's an excuse, but she wasn't neccessarily incompetant, it could have happened to anyone in her position. I have a brief bit on her at the end of my blog post for today (one of my posts, should be the second one down).

As for who is replacing her and where she is headed I'm not sure. I'll look into it though myself probably after the weekend.

Share this post


Link to post
Share on other sites
From what I can understand, I think it was a silly and rather costly mistake for Fiorina to push forward in the Compaq deal.

I thought the Compaq merger was a misguided decision from the beginning, and if Fiorina’s championing it led to her being axed, she got what she deserved.

Share this post


Link to post
Share on other sites
I thought the Compaq merger was a misguided decision from the beginning, and if Fiorina’s championing it led to her being axed, she got what she deserved.

From everything I have read the Compaq deal was a big part of her being fired. The company didn't grow in the tech field as they had hoped to (as she had promised to do for them.) I suppose I can understand her reasoning for pushing the deal (synergy....I guess?)

I mean Compaq did just hire, supposedly, a fantastic cyrptographer and that may help them in the years to come but for the most part their R&D teams...well...just aren't doing anything all that great. Open Source Handheld Computer OS? Open Source Web Programing language? I don't think these are things I would sink money into. Not that I don't apperciate open source (for the sort of work I do-- the power of Linux and Unix is an added plus) but I don't expect large corporations to produce this work for me.

The things their R&D department have been up to:

http://research.compaq.com/news.html

Corporate Research Headquarters

250 University Ave.

Palo Alto, CA 94301

Major Focus

Planetary Scale Computing

Internetworking Beyond Today's Internet

Personal Computing in Post PC Era

The first I am not qualified to speak on but the Personal COmputing in a Post PC era is...well...we are still in a PC era and with available technology I can't really see that ending anytime soon (at least not in the handheld PC sort of way) I think Bill Gates has a -much- more realistic approach to the future of the computer industry, as he always has.

Also, HPQ's spending to buy back stocks (about 4% of the available stock) outpaced any money made of their dividend...not a very good strategy.

(the following is from newsfactor.com)

Switzerland of Technology

Another interesting point in HP Services' favor, DiDio says, is the wide range of partnerships and alliances the firm has developed with such companies as Microsoft, Computer Associates, Red Hat, Novell -- even the SCO Group. "To a very large degree, they are the Switzerland of high tech," she says.

HP won't be able beat Dell on the hardware side, DiDio notes. Indeed, Dell is going after HP's sacred cow -- its printer division -- with the formation of its own product line and sales team.

"The future money for HP, as far as I can see, is in software and services," DiDio says.

Share this post


Link to post
Share on other sites

This Thursday's WSJ had a lot of coverage on this.

From what I read, the Compaq deal and the failed vision of a technological one-stop-shop are the main reasons that Fiorina was canned. In fact, there is talk about HP spinning of some of their individual businesses.

Also, although I think she technically resigned, the article made it very clear that she was forced out of her position.

One article was good in that it recognized the fact that her dismissal had absolutely nothing to do with her being a woman. In fact, some of her fiercest opponents were women themselves. This is to be expected in business, where someone's ability to generate profits is to be judged, not their sex.

Share this post


Link to post
Share on other sites
I'm curious why Carly Fiorina has been a business hero of yours.

When she took over HP, I read a bit about her and how she came from Lucent which was struggling. I've always assumed she jumped from Lucent before she could be blamed for its failures. However, this has just been a personal opnion based on limited reading, so I'd be curious as to the reasons you think she's one of the "good guys".

From her history, she really did show alot of hustle and some really good ideas. Plus, she was a woman that managed to be a real success in an industry that doesn't have alot of women at the time. She didn't get the job because she was a woman but she was the best candidate. She also maintained an air of femininity that alot of successful women are percieved to abandon by conventional wisdom.

Her failing was the incredibly flaewd idea of buying Compaq who at the time had not finished digesting Concurrent and DEC. Plus, the synergies and vertical integration they in theory would get didn't materialize. Quite the contrary. I think short of AOL & Time Warner, there wasn't a more stupid merger during the dot com boom. She lost her job not because she was a woman but because she was a bad strategic manager. A more PC corp would have kept her on board because she was a woman.

As for Lucent, there was a pretty systemic problem that went beyond her. The management put way to much cache in the Bell Labs and Lucent brands. They decided that the magical "brand" was more valuable than the innovations that made them that valuable. They quit innovating which was their core business. In alot of cases (ie phone systems) they just re-branded other peoples equipment, and tried to earn fees as integrators. That is really hard to pull off. Plus ATT saddled them with other baggage after the spin off.

Share this post


Link to post
Share on other sites
From her history, she really did show alot of hustle and some really good ideas. Plus, she was a woman that managed to be a real success in an industry that doesn't have alot of women at the time.

What was her history? This is not a rhetorical question, I'm really curious?

And, what wer her successes -- not that she was a senior manager -- I don't count that -- but what did she acheive "out there in the world" in terms of products, companies and the like?

Share this post


Link to post
Share on other sites
What was her history? This is not a rhetorical question, I'm really curious?

And, what wer her successes -- not that she was a senior manager -- I don't count that -- but what did she acheive "out there in the world" in terms of products, companies and the like?

She got a degree in history or philosphy I think. She then went on to get her MBA and an MS from Sloan (of that I'm sure. ) Doing that radical of a shift in degrees is not easy. She started in relatively boring job selling long distance with AT&T. She proved really good at marketing and was tapped to lead other internal and external marketing efforts for ATT. She did a stint in Europe (not 100% sure on that point) and at one point was responsible for 50% give or take of Lucent's revenue when she was in control of their systems integrations unit. She got units to cooperate and play off of each others strengths to sell a unified product line instead of a product hear and there. I hate the saying "we sell solutions not products" but that is really what they were doing. That was when Lucent was growing and they and Bell Labs had the well deserved respect for being innovators.

The thing that she did remarkably well was handling the Lucent IPO. She was one of the key players in getting ATT to spin them off. She was CFO or COO at the time and handled the spinoff pretty well. If you have never seen the behind the scenes mechanics of an ipo, it's a bit like Gallipoli. They are very ugly and require some pretty brilliant thinking and planning to get out alive. If it weren't for some of the financial and cultural considerations that ATT made sure to sloff off Lucent really did have a chance at being great. That plus bad managers in other parts of the company caused the problems that lead to their downfall. They made the same mistake lots of companies from Bank of America to IBM have made: they confused the value of brand name and value of quality in the actual product.

One of the reason that HP picked her to run the company was her abilities to handle spinoffs and mergers. So in a way one of her key tasks was to merge HP with others and jettison bad units. In this case those skills didn't translate well. Plus, getting big for the sake of getting big is a really bad idea. However, I heard her speak and some of her ideas of vertical systems integration, marketing, and consulting along with selling a soup-to-nuts approach to it all ala' IBM impressed me.

However, the cultures were way different and Compaq itself wasn't fully integrated as a company. She tried to move HP from doing what it does best and tried to turn it into a hybrid of Dell and IBM that didn't work out. If it panned out HP would be in incredible shape but it didn't. She failed big time and she is going to get canned.

Share this post


Link to post
Share on other sites

I have never liked Fiorina. Clearly the market didn't like her either, which is why HP stock jumped on the news of her ouster.

Why don't I like her?

1. Someone close to me worked in Lucent in a position assessing internal risks and controls in the late 90's. Fiorina was head of marketing at LU before she jumped ship after getting passed over for the chairman job. She was responsible for the sales effort of the division that just a couple of years later got caught for bad accounting and business practices. Some people think she helped set the stage for this by setting unrealistic sales targets, not being reality-focused and thus not caring whether appearances matched reality, and then jumped out early enough to avoid getting the blame when it hit the fan.

2. Of the vast amount of interviews she's conducted with the media (she must have the busiest publicist of all CEOs), I've almost never seen more than vague generalities from her. (The equivalent of "the children are our future" for business, like "excellence is our number one priority"). She appears to only think and speak primarily in vague, "inspirational" generalities, yet still wants to micromanage things she doesn't seem to understand the details of.

3. Her management record appears to be one of long term value destruction, doing things at companies to make headlines and helping her get her picture on magazine covers. Publicity and fortune for her, eventual misery for shareholders.

4. The one big decision she bet the HP company on was dumb. So dumb that pretty much only the investment bankers collecting fees from HP, and her, tried to make a case for it. This was classic "empire building" with other people's money. Again, headlines for Carly and a bigger company for her to manage, value destruction for shareholders, and impossible goals set for employees. Acquisitions also allow for lots of accounting gimmicks that can spur short-term earnings gains, but even those got overpowered by the business cycle that Fiorina and other tech superstars forgot existed.

Share this post


Link to post
Share on other sites

I don't know much about Fiorina's personality - but HP is a great company with great products and great services. I'm sure the CEO has something to do with it.

Also - I read long ago that the character of Dagny Taggart is what inspired her to go into business.

She has style, you have to give it to her. And I don't believe the stock market is a good measure of a person's worth. Especially not this short term reaction.

Share this post


Link to post
Share on other sites

The value of HP was created in its long history before Fiorina. The one day shows what the market thought of her as a manager, yes it is inexact, but directionally unmistakeable. The announcement that she was out added about $6 billion to the value of HPQ's total market value. (The Negative Six Billion Dollar Woman might become a new nickname for her here on Wall St.) That wasn't random chance. For five years (not short term) Fiorina had the opportunity to create value, and HPQ had consistently underperformed peers in terms of profitability and in shareholder returns.

HPQ shareholders hired Fiorina to work for them, she didn't create the company, she weakened it, while using it as a platform for her own publicity.

I've read many interviews of Fiorina in business publications, even one asking about philosophy influences. Never did I see any comment from her indicating any familiarity with or influence of Objectivism. I don't recall what philosopher she cited as an influence, but I recall disliking her response (maybe Plato, or Hegel).

"You have to master not only the art of listening to your head, you must also master listening to your heart and listening to your gut." Said Fiorina

I think Compaq was her indigestion talking.

Share this post


Link to post
Share on other sites

REUTERS :March 2, 2005

"Ousted Hewlett-Packard Co chief executive officer Carleton ``Carly'' Fiorina has emerged as a strong candidate to become president of the World Bank, the New York Times reported on Wednesday, citing an official in the Bush administration."

Fiorina's name wouldn't be leaked if she hadn't already been contacted and wasn't interested.

If at first you don't succeed, try try again, this time playing the altruism card, within an organization that specializes in propping up mismanaged economies, funding so-called "market failures," and enabling government corruption. I have no doubt that whomever is appointed, there will be talk of "reform," and I am just as sure that the only true reform of the World Bank would be its closure.

I can already picture the innumerable photos in magazines of Fiorina posing with poor third-world kids. No doubt this would look good on her resume, as a transition step into elected politics.

I hope Fiorina's first big decision would be to have the World Bank aquire the IMF, (a la HP - Compaq) so that both corrupt institutions can fail together, though alas this is virtual impossible.

Edited by A.West

Share this post


Link to post
Share on other sites
I thought the Compaq merger was a misguided decision from the beginning, and if Fiorina’s championing it led to her being axed, she got what she deserved.

And that's why I thought that Fiorina was axed.

It was a known fact that Compaq, prior to its acquisition by HP, was a faltering company, fraught by mismanagement, beaten by its competitors who put out better, more reliable product.

Fiorina saw this opportunity to get HP into the personal computer business and increase market share. It didn't work out that way.

Compaq's product continue to be middling, and its tech support has drawn scorn rather than praise. HP's profits continue to come from its core businesses, which include printers and supplies. Compaq actually turned out to be a cash drain on HP.

The Fiorina business plan failed. She deserved to get the boot.

Edited by Yes

Share this post


Link to post
Share on other sites
HP announced layoffs of 15,000 people. Meanwhile, Carly walked away with millions in severance pay. With "friends of Capitalism' like her, who needs enemies.

Sad thing is, the millions she got to leave probably cost less for HP than what it would have cost HP by having her around. Kind of like the cost of having an infected tattoo removed. No matter how great of an idea it was at one point and how nice it was, sometimes you gotta fork over some serious coin to fix your mistakes.

Being from Houston, there alot of locals that have already been let go and lots more to be let loose.

Share this post


Link to post
Share on other sites

If Carly Fiorina is the type of person I think she is, then I have worked for that type. They're able to weave a "story" around them and their company or department for a certain amount of time. I cannot think of which Atlas Shrugged character would be equivalent. They're like Philip Larkin in competence, but everyone around seems to think they're Rearden.

In the internet boom days I worked for a firm where the CEO cleverly ended up being fired, and $40 million richer. Yet, it only took less than a year to see that he was a shyster. In those days, the investors did not seem to mind that (perhaps it's still the same), They had one eye on "how good is this company"? But, a more important question in their mind seemed to be: "how good can we make this company appear to the next buyer". Everyone spoke in terms of: "what is the story"? The company was sold three times, and the only ones who really made loads of money were the original promoters.

There was one thing I did learn: many other people in such companies are complicit. The way it works is that the cheif shyster promotes and surrounds himself with mini-shysters. They all sing each others praise and stick to the same script. Each min-shyster realizes that they owe their position and perks to keeping the game going as long as possible.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

×
×
  • Create New...