Declaration of Victory Seen as Vintage Fiorina

It was classic Carly.

Early Tuesday morning, standing before an auditorium packed with snarling shareholders, Hewlett-Packard Co. Chief Executive Carleton S. “Carly” Fiorina declared victory in Silicon Valley’s most bitterly waged corporate war.

It didn’t matter that she might be wrong. The marketing guru, who has emerged as one of corporate America’s most controversial executives, focused on the mantra that has been her touchstone throughout her nearly three-year reign: Exude confidence and pray you’re right.

The gamble was quintessential Fiorina. She has staked her career on the fate of HP’s proposed $20-billion takeover of Compaq Computer Corp. With the ballots cast and waiting to be counted, she has nothing left to lose. If she wins, she is a soothsayer with a promising future. If she’s wrong, critics expect her to be ushered out the door.

The high-tech world is littered with executives who couldn’t manage the next technology transition. Eckhard Pfeiffer of Compaq, Apple Computer Inc.’s Gilbert Amelio and Ellen Hancock of Exodus Communications Inc., among many others, were never able to recover from their inability to judge new directions as industry conditions shifted radically underfoot.

Even Fiorina’s closest friends acknowledge that she could easily join this executive graveyard if she loses the proxy fight for Compaq. But on this crucial day, Fiorina concentrated on sending out an optimistic message. She shocked the crowd of shareholders, surprised Wall Street and infuriated one of her own directors, Walter Hewlett, son of co-founder William Hewlett.

By declaring victory at the Flint Center in Cupertino, Fiorina gave herself a pseudo- mandate to move forward with the merger--at least for the next three weeks until the tally has been certified.

At the very least, the strategy allows her to prepare the finishing touches on a massive effort to integrate the day-to-day functions of two computer behemoths, which includes finding 15,000 jobs to cut. She also must blend the corporate cultures of HP’s past and Compaq’s present into a seamless future.

Wall Street analysts, who insist that the proxy vote is too close to predict, see Fiorina’s declaration primarily as a rallying cry for her troops--as well as for herself.

“It sounds like such a political election scenario that maybe by claiming victory she’ll make it come true,” said Daniel Kunstler, senior analyst at J.P. Morgan Chase & Co. in San Francisco.

“The odds are probably better that they did win, but the fact is it’s still too close to call.”

If Fiorina is wrong--and a good chunk of HP shareholders hope she is--that would provide the ammunition to critics who have been calling for her removal. A scathing open letter published in January in the trade magazine Red Herring began with a simple request: “Dear Ms. Fiorina, Please resign.”

“I was disgusted with her appointment from the minute she came in,” said Fred Hickey, editor of the High Tech Strategist, a financial newsletter. “If I was a betting man, I’d bet that the Hewlett-Packard employees will vote en masse against Carly.”

Heralded as Hero, Lambasted as Heathen

Fiorina, who received degrees from Stanford University, the University of Maryland and MIT, gained a reputation while at Lucent Technologies Inc. as a fearless, high-energy corporate leader.

Her plan for HP was equally aggressive. She endeavored to transform all aspects of the firm at once, despite the economic slump. As she promised to remake HP’s plodding culture and restore growth, it seemed the company had finally found someone who could fill the shoes of its legendary founders: Hewlett and David Packard.

But as quickly as she was heralded as a hero, Fiorina was lambasted as a heathen, someone who pushed too hard and too fast for the slow-moving HP. It was a classic peril for an executive who tries to play the role of savior and fails to reap success fast enough to please her corporate constituents.

The stakes for Fiorina are huge. Her attempt to buy consulting firm PricewaterhouseCoopers for $18billion in late 2000 was abandoned after two months under intense pressure from shareholders.

Should the blockbuster Compaq deal fall through as well, few believe she will stay with the firm.

“A few months ago I would have said this vote’s a referendum on Carly Fiorina,” Kunstler said. “To her credit, she’s managed to turn it back to a referendum on the merger.”

Appearing tired but poised Tuesday at the Flint Center, Fiorina read brief remarks. Then, in a vintage move, she waited for the onslaught of hostile questions to begin and calmly responded, always underscoring her pitch.

Politics aside, analysts say it was incumbent upon Fiorina to say something definitive about the merger.

It could be days, or even weeks, before the election results are official. In the meantime, neither HP nor Compaq can afford to exist in a state of suspended animation.

“If she went up there and said, ‘We’re not going to know anything for three weeks,’ that would be bad for [employee] morale,” said Tom Burnett, president of Merger Insight, a research affiliate of New York brokerage Wall Street Access. “She has to do something like this.”

Many Industry Analysts Believe HP Will Prevail

But not everyone bought into Fiorina’s vision. Some small investors said they had voted against the acquisition because they were put off by Fiorina’s approach, such as her personal attacks on Walter Hewlett.

Hewlett was met with a standing ovation at the shareholders meeting and was interrupted by applause during his brief remarks. Fiorina, on the other hand, received boos and hisses when she said that a majority of HP employees supported the acquisition.

Burnett acknowledged that Fiorina must have convinced Hewlett-Packard’s lawyers that she had enough votes in hand from large institutional investors to make a public statement of victory.

Although there have been close proxy fights in the past, there has never been a battle this big that has remained this close this late in the game.

Many industry analysts believe HP will prevail, but they are convinced more by the events of recent weeks than by Fiorina’s public spin Tuesday.

“With this slim a margin, we have to fess up to the fact that this is a guessing game,” Kunstler said. “It’s simply too close to call.”

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Times staff writers Joseph Menn and Charles Piller contributed to this report.

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Tracking Hewlett-Packard’s Shares

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