|"Only dull people are brilliant at breakfast"
|"The liberal soul shall be made fat, and he that watereth, shall be watered also himself."
-- Proverbs 11:25
The action was a stunning blow to Fiorina, 50, one of the most powerful women in business, and a repudiation of her leading of H-P's controversial 2002 acquisition of Compaq Computer
Fiorina pushed through the $19 billion merger as part of a bold plan to remake the Silicon Valley icon into a computing and services giant that could challenge IBM. Yet the merger never produced the results promised, and as Fiorina worked to integrate the two huge companies, Dell Inc. leapfrogged past H-P to become the leading seller of PCs.
And H-P shares lost more than half their value during Fiorina's tenure, underperforming Dell's by a wide margin and also lagging IBM's stock performance.
Investors rallied behind H-P's stock after learning of Fiorina's departure. The shares climbed $1.39, or almost 7 percent, to close at $21.53. The Dow component was the most heavily traded issue on the New York Stock Exchange, with volume of more than 102 million shares.
Controversy surrounded Fiorina from the beginning of her H-P tenure, which included laying off thousands of workers in a painful restructuring.
But the most divisive move was her acquisition of Compaq, which she spearheaded despite fierce opposition from board member Walter Hewlett, the son of H-P co-founder William Hewlett.
Hewlett argued that acquiring Compaq, at the time the largest maker of PCs, would dilute H-P's profitable printing business, kill shareholder value and lead to massive layoffs.
The bitter fight prompted a proxy battle that raised questions about H-P's business direction and became a major distraction for the company's management. When the acquisition was completed in 2002, it led to the firing of more than 17,000 employees and the acrimonious departure of Hewlett from the board.
"H-P has been a great company," Hewlett said in an e-mailed statement after Fiorina's departure was announced. "We all look forward to H-P fulfilling its promise." The Hewlett Foundation still owns about 10 million H-P shares.
In August 2004, Fiorina had to deal with H-P missing its third-quarter estimates. She blamed the results on poor performance in the company's enterprise servers and storage business, and fired three executives from the division.
While Dunn said on the conference call that there was no connection between those results and Fiorina's firing, investors believed Fiorina was to blame for the company's poor results.
"Now the business unit leaders will have the autonomy to run them properly," said Hillman.
At HP, Fiorina developed the reputation of a manager who knocked heads together—or who chopped them off. And there were massive layoffs during her tenure. In 2003, the company announced it would dismiss almost 18,000 people. (That year, the firm posted a $903 million loss on $56.6 billion in revenue.) When the outsourcing of jobs turned into a national political issue, Fiorina became the poster-girl for an industry campaign aimed at blocking any legislation that would restrict a company's ability to can American employees in favor of workers overseas. She and executives from seven other tech companies issued a report that argued that any such measures would hurt the U.S. economy. The best way to increase American competitiveness, they declared, was to improve schools and, yes, reduce taxes. At a Washington press conference, Fiorina said, "There is no job that is America's God-given right anymore. We have to compete for jobs." The remark did not go over well with critics of outsourcing, who have ever since used it as an indicator of corporate insensitivity.
Fiorina's stint at HP was marked by other moments of controversy. In March 2004, after HP shareholders voted 1.21 billion to 925 million to expense stock options, she opposed the move, essentially opting to stick with accounting practices (that were used by other corporations) that did not reveal a company's true value. That same year, Forbes reported that Hewlett-Packard was "among many other U.S. companies that kept offices in Dubai and were linked to Iranian traders there." The article suggested that HP and other countries were skirting export controls to trade with Iran. And in early 2005, Fiorina announced that pop star Gwen Stefani would join the HP design team and work on the company's line of digital cameras.
Fiorina wasn't around long enough to see her Plan Stefani to completion. In February 2005, she was pushed out of HP. The company's board, with which she had been battling for years, had had enough of her. The Compaq merger had not yielded the benefits—improved shareholder returns and greater profits—she had promised. At the time of her dismissal, Hewlett-Packard stock was trading at about the same price as when she first unveiled the Compaq deal. Eighty percent of the company's operating profits were coming from its old-line printing business. She had not succeeded in reviving HP as a computer-selling powerhouse. The day she was dumped, the company's stock price rose 7 percent. That was Wall Street exclaiming, Hooray. As Robert Cihra, an analyst with Fulcrum Global Partners told Money magazine, "The stock is up a bit on the fact that nobody liked Carly's leadership all that much. The Street had lost all faith in her and the market's hope is that anyone will be better."