Fiorina’s Future at HP in Doubt
The high-profile reign of Hewlett-Packard Co. Chief Executive Carly Fiorina may be nearing an end.
Fiorina, the nation’s most powerful female executive, had pinned her company’s future on the merger with Compaq Computer Corp. Now, with the deal in serious jeopardy, she is facing stinging criticism about her judgment.
“I don’t think she can survive this,” said Rob Enderle, a technology analyst with Giga Information Group, echoing the views of many others. “This is looking like a string of failures.”
HP board members were not available for comment. Spokeswoman Rebecca Robboy said that with the exception of Walter Hewlett, the board is “100% behind Carly.” If so, they may be among her last strong supporters, analysts said.
Experts say the merger’s--and Fiorina’s--last hope may be if other institutional investors resist what appears to be a groundswell of opposition to the deal.
“If it should fail, she’s going to lose a lot of stature in the company and the broader community,” said Raymond Miles, emeritus professor of business at UC Berkeley.
It is a long way from the kudos and hoopla that greeted Fiorina when she arrived at HP 21/2 years ago.
Carleton “Carly” Fiorina already was one of the most powerful businesswoman in America--a high-energy corporate leader who had made her name as a group president at Lucent Technologies.
As chief executive of HP, she became the first woman to head a blue-chip company that is part of the Dow Jones industrial average. She is an icon of female power in a male-dominated industry.
She also is HP’s first CEO hired from the outside--recognition by the board that the venerable, slow-moving HP needed fresh blood to push the company ahead in the fast-moving Internet economy.
Fiorina, 46, charged into the ossified, consensus-driven world of HP, the world’s second-largest computer company.
In one of her first moves, she streamlined the company into four units: Two focused on computers and printers, and two focused on sales--one to consumers and one to businesses.
She launched an expensive ad campaign featuring the garage in which founders Bill Hewlett and David Packard first worked. Inside the company, “garage” posters went up: “Radical ideas are not bad ideas” and “No politics, no bureaucracy.”
Fiorina came in with a clear mandate: Update a venerable, but dated, corporate culture and boost profit.
But conditions at HP already had deteriorated as it moved from highly profitable corporate computers and scientific equipment and devoted itself to PCs and printers for consumers. Those mass-market products had become commodities--with little to differentiate themselves from the competition.
HP already had lost its mystique as the original Silicon Valley start-up bursting with innovation, said Miles, who has studied the company since 1961.
“It was [once] a magical place, because it was a group of engineers who basically sold things to other engineers,” he said.
“The company’s biggest mistake was to expand so heavily in areas that HP has no special advantage,” Miles said.
Fiorina tried to restore that old philosophy, adopting the slogan “Invent” as HP’s new trademark. Then she hit the brick wall of a collapsing tech economy. This meant few of her biggest plans could be executed.
Fiorina, who was born in Austin, Texas, studied philosophy at Stanford, law at UCLA, marketing at the University of Maryland and business administration at MIT’s Sloan School of Management.
After receiving her MBA, she joined AT&T; Corp. as a sales representative. She made a series of gutsy career moves, including jumping from an easy marketing job to the unglamorous equipment arm of AT&T; that later became Lucent Technologies. At Lucent she was known as smart and willing to take big chances.
When she moved to HP, one of her early mantras was that the company had to move away from its traditional focus on hardware and into “e-services.”
“The money is going to be driven by services,” she said in an interview with The Times last year. “The computer is [only] a platform for delivering services.”
Among her first moves was an attempted acquisition of PricewaterhouseCoopers’ consulting business for $18 billion. But she was forced to abandon the plan when investors balked.
In the face of the PC industry’s downturn, HP began to badly miss its earnings estimates. Fiorina asked employees to take a salary cut in lieu of layoffs. Soon after, she was forced to lay off thousands of employees anyway.
Meanwhile, Fiorina was putting herself forward as the charismatic emblem of HP’s future, appearing in the company’s advertising as leading the charge for a new generation of HP innovation.
“Her strategy was to promote Carly as the hero of the day,” said Enderle. “You don’t want to call attention to yourself before you validate your success.... That destroys an executive’s ability to lead.”
Fiorina’s biggest gamble by far was the decision this fall to engineer the acquisition of what was then the world’s second-biggest PC maker. It struck analysts as muddled, given her touting of “e-business” so recently. Investors savaged both companies’ stocks.
The heirs of the firm’s founders--among the company’s biggest shareholders--seemed increasingly uneasy about seeing the cultural and financial legacy of the company zig-zagging into an uncertain future.
“She stood for change,” said Enderle. “Her epitaph may be that sometimes change by itself is not a good thing.”
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Times staff writer Joseph Menn contributed to this report.
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