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Profits may not equal success

Carly Fiorina's business experience is a mixed blessing in political realm.

May 20, 2010|Robin Abcarian

Eleven years ago, Carly Fiorina, who proudly touts herself as a one-time secretary and law school dropout, was hired as chief executive of tech giant Hewlett-Packard Co. Her mission: to breathe life into the slumbering electronics giant, which was missing out on the technology boom going on around it.

Fiorina was by then a seasoned AT&T and Lucent Technologies executive who had been named the most powerful woman in business by Fortune magazine. As she marched into HP wielding a mandate for top-down change, her quest to streamline the sprawling, egalitarian company was complicated by her rock star persona and a case of bad timing.

In 2001, as the dot-com bubble burst, she masterminded one of the largest tech mergers in history -- HP's $19 billion purchase of Compaq Computer Corp. An eight-month battle royal ensued as the families of the company's founders and many HP employees turned against her. She won a proxy vote by a sliver in 2002, and began the enormous task of integrating the two companies.

Less than three years later, she was abruptly fired, a blow cushioned by compensation worth about $42 million. Her ability to execute her vision was found lacking by the very board of directors that had supported her through the difficult merger fight.

For The Record
Los Angeles Times Saturday, May 22, 2010 Home Edition Main News Part A Page 4 News Desk 2 inches; 58 words Type of Material: Correction
Carly Fiorina: An article in Thursday's Section A about former Hewlett-Packard CEO Carly Fiorina's quest for the Republican U.S. Senate nomination said allegations that the company had evaded the U.S. trade embargo against Iran first surfaced in a December 2008 newspaper report. Several reports had been published before then mentioning HP among companies suspected of skirting the embargo.

"The stock took a beating, but she was absolutely correct," said venture capitalist Tom Perkins, a supporter despite having been a member of the HP board that fired her. "The merger was a brilliant move. Look where HP is now: the biggest computer company in the world."

HP is not a better company, though, said David Woodley Packard, who opposed the merger. "I feel she destroyed the culture of my father's company," he said.

But Packard doesn't blame only Fiorina: "To be fair to Carly, the HP board should have known better when it hired her. If you have a pet bunny and get a pet ferret, you can't really blame the ferret for eating the bunny. That's what ferrets do."

Fiorina and her husband, who own a mansion in the Bay Area community of Los Altos Hills and a luxury condo in the Washington neighborhood of Georgetown, could have sailed into retirement on one of their two yachts (Alchemy V and VI).

Instead, Fiorina, 55, hopes Republican voters will give her a shot at Democratic U.S. Sen. Barbara Boxer's seat.

Fiorina's personal story, which includes treatment for Stage 2 breast cancer, has made her an appealing figure on the campaign trail. Her fortune has made her a viable one: She has lent her campaign $3.6 million so far.

She describes her Republican primary opponents -- former Rep. Tom Campbell, who has led most polls this spring, and Irvine Assemblyman Chuck DeVore -- as professional politicians and argues that running one of the world's largest tech companies gave her the "real-world" experience that voters seek.

But the imperatives of operating a global business have been known to clash with what voters may consider the greater good. At a time when employment is a top concern of voters, Fiorina's aggressive push to move jobs overseas, coupled with extensive layoffs on her watch at HP, have made her vulnerable to charges that she put profits above American jobs.

As she tries to carve out support for herself on with her party's tax-averse right flank, Fiorina has had to explain why she appeared to support taxation of Internet commerce while running HP. And despite her calls for harsh sanctions against Iran as it develops its nuclear program, an HP subsidiary sold products to Iran through an intermediary while she headed the company, even though a trade embargo was in effect.

Fired from HP

When Fiorina was fired from HP in February 2005, few shed tears for her. Her stewardship had been so rocky that half a decade later the jury is still out on whether she was a success or failure.

Her supporters say she was a strategic genius who, despite intense shareholder opposition, stuck to her plan to breathe life into a stodgy, decentralized technology giant, thereby setting the stage for its current success.

Her detractors see a brilliant careerist who laid waste to the collegial ethos of the original Silicon Valley startup in her quest to remake the company in her own image, poisoning its stock price, which dropped more than 50%, along the way.

She axed tens of thousands of jobs, killed HP's beloved profit-sharing plan and, in the eyes of her many passionate critics, exorcised the benevolent ghosts of company founders Bill Hewlett and Dave Packard, whose worker-friendly management practices were known as "the HP Way."

The issue of whether Fiorina created jobs may loom over her if she becomes the Republican nominee. Her record of layoffs and aggressive outsourcing is tailor-made for the Democrat-supporting labor unions that have already mobilized against her.

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