Wednesday, February 09, 2005

Carly's Swan Song

HP gave controversial CEO Carly Fiorina--brainchild of the mega $19 billion merger with Compaq--the boot on Wednesday.
Fiorina, considered one of America's most powerful business women, drew effusive praise and criticism during her more than five-year tenure at HP...Many on Wall Street hope HP will spin off its printing division, which delivers most of its profit, and HP shares, which have lost 63 percent of their value since Fiorina became CEO. Silicon Valley's original start-up had become known for an insular and balkanized corporate culture celebrated internally as "The HP Way." But the record under Fiorina remained spotty, with HP dashing investor hopes in three of the last nine quarters as it lost market share to rivals Dell and IBM.Fiorina will leave with a $21 million severance package.Fiorina had become a lightning rod for criticism from investors and some in the Silicon Valley establishment for pushing through the 2002 merger with rival PC maker Compaq. She took on the founding families who opposed the deal, beating family scion Walter Hewlett in a proxy contest decided the morning of the vote. Fueled by enthusiasm at the prospect that the company would once again consider splitting up, shares of HP closed up 6.9 percent.
Fiorina was hired six years ago to reboot the company--instead she sent it to the dump. I don't like to judge companies vis-a-vis stock performance, but unfortunately we live in a country that does. HP stock plummetted 84% since Carly took over--In 2002, HP tried to invigorate its PC business with the purchase of Compaq. That only increased debt, debt which falling earnings could never save. Debt that Dell never saw on its balance sheet. While "the company climbed to fourth place from 16th on the list of organizations receiving the most patents," it was time for Carly to part ways with the company. Shareholders were grumbling and it is to them the Board is ultimately accountable.

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