Now seeking White House, Fiorina’s CEO tenure was stormy
SAN FRANCISCO (AP) — In her quest for the Republican presidential nomination, former tech CEO Carly Fiorina boasts about her experience running Silicon Valley computer-maker Hewlett-Packard as evidence that she’s “a problem solver, with a track record to prove it.”
What her campaign literature doesn’t highlight is that she was fired from that job in 2005, after a stormy tenure.
Like Mitt Romney, the Republican presidential nominee in 2012, she is making her business background a key part of her campaign. But she enters a crowded Republican field that is expected to include Jeb Bush, the brother and son of former presidents.
Fiorina has blamed her ouster on a sudden showdown with HP directors, but most of her six years as CEO were contentious. She cut more than 30,000 jobs and undertook a massive merger with rival Compaq, which sparked a messy battle with the families of HP’s founders. The company missed some key financial targets and, from her hiring to her firing, its stock price fell more than 50 percent.
“I got fired in a boardroom brawl over a two-week period because when you challenge the status quo you make enemies,” Fiorina said Wednesday night at the Republican National Committee’s spring meeting in Arizona.
To be sure, HP’s board hired Fiorina as an outsider with a mandate for change, which often requires unpopular decisions. And today, many analysts say her move to buy Compaq, in a $25 billion stock deal, put HP back on track as an industry leader in subsequent years. But as CEO, she alienated employees, influential shareholders and her own board, which ultimately hired someone else to make the Compaq deal work.
“The day she was fired, the market responded and HP’s stock shot up 7 percent,” said Jason Burnett, a grandson of co-founder David Packard. “That’s a clear signal.”
Burnett faults Fiorina for a steep drop in the company’s stock value, and for layoffs that he said crushed the morale of a company that pioneered Silicon Valley’s benevolent, laid-back corporate culture. Fiorina has said the job cuts were necessary after the tech industry bubble collapsed in 2001.
Though she worked briefly as a secretary, Fiorina rose through management and was president of AT&T spinoff Lucent Technologies when HP named her chief executive in 1999. HP, based in Palo Alto, California, had been known for tech innovation, but its growth had slowed. “It was stuck in the mud and it wasn’t moving,” said Rob Enderle, a longtime industry analyst.
The new CEO cut a compelling figure, appearing on magazine covers and hobnobbing with celebrities. Detractors say Fiorina was imperious and even harsh with subordinates, while supporters suggest she raised hackles as a woman in a male-dominated industry. Either way, her first big move fizzled: She tried to buy the tech consulting arm of PricewaterhouseCoopers for $18 billion, then cancelled the deal after Wall Street balked at the price.
When Fiorina turned to Compaq in 2001, she ran into opposition from a faction of her own board, led by Walter Hewlett. The son of retired co-founder William Hewlett argued that Fiorina was paying too much for a low-profit PC operation that would dilute the value of HP’s more lucrative printer business. Fiorina only prevailed after a bruising proxy battle and an equally bitter court challenge.
HP’s sales doubled during Fiorina’s tenure, rising to $80 billion a year thanks to the addition of Compaq, which had $40 billion in annual sales before the merger. Profits plunged after the 2001 dotcom bust, although they eventually returned to 1999 levels. But HP’s stock lagged far behind rivals Dell and IBM.
By early 2005, HP’s board wasn’t satisfied. Fiorina had reorganized the company to centralize her authority. By several accounts, directors pressed her to share more power with other executives. Fiorina has said she agreed to changes but was outraged after word leaked to the press, sparking a showdown that led to her firing — and a $21 million severance package.
HP thrived under Fiorina’s successor, who boosted profits and the value of HP’s stock. New CEO Mark Hurd cut costs deeper, while also using the combined size of Compaq and HP to negotiate lower prices from suppliers and to sell businesses a broad range of computer products.
In 2008, former Compaq Chairman Ben Rosen wrote that Fiorina was the merger’s architect but “she simply did not have the skills” to make it work. “The merger wasn’t the problem; it was the management,” Rosen wrote.