Fiorina run is deja vu for eating words
Whenever I think about Carly Fiorina running for president, I get a stomachache. Oddly, this has little to do with her pronouncements on the campaign trail. I applauded her for going after Donald Trump. I’m talking about a real stomachache, rooted in memory.
In 2003, I was a business columnist when Fiorina, then the CEO of HewlettPackard, was pushing hard to complete the acquisition of Compaq Computer. I was a critic of the deal. In a moment of bravado, I vowed to eat my words if she got it done.
Through heavy-handed tactics — more on this later — Fiorina did get the shareholder votes to complete the deal. So as promised, I brought in a coffee grinder, ground up a couple of columns of newsprint, then spooned them down with the help of buttermilk. Fiorina sent a photographer to memorialize the moment.
It didn’t taste that bad: Buttermilk cloaks a variety of edible sins. But later on, I felt it deep in my stomach. And it’s that steely feeling — a dull ache rather than acute pain — that I experience when I see her on the dais.
As it turned out, the ability to assemble votes for the Compaq deal was not much of a test of her tenure. It was a bad deal, one that took HP in the direction of hardware in a competitive market rather than the more profitable area of consulting and services.
Fiorina has staked her candidacy on her business career. And that’s why I’m glad Yale professor Jeffrey Sonnenfeld wrote a piece recently in Fortune that demolished her boasts of success at HP (read it at goo.gl/tVafcK).
Bad deal
To begin with, there was the matter of size: Fiorina has boasted that she doubled HP’s revenues to $90 billion. But she didn’t do it from within. She did it through the massive and ill-thought-out Compaq acquisition.
Sonnenfeld maintains that she did nothing to improve HP’s profits. Compared to the S&P 500, shareholder wealth was sliced by 52 percent during her 1999-2005 tenure.
Then there were her tactics during the Compaq battle. Fiorina brought pressure on Deutsche Bank, a major HP stockholder that originally opposed the deal. In a meeting with the commercial bankers, who craved HP business, she warned that the proxy vote “is of great importance to our ongoing relationship.” A threat doesn’t get much clearer.
Maybe more serious than all that was the damage she did to HP’s culture. If founders David Packard and Bill Hewlett managed by walking around, Fiorina ran the company by fiat. HP lost vast cadres of talented employees.
When the company’s board of directors fired her in 2005, Fiorina received a $21 million severance package. With the $65 million signing bonus she got when she joined HP, she received more than $100 million in compensation for her six-year term. She’s never been hired as a CEO since.
I know that Fiorina had a strong performance among the also-rans in the first Republican debate. But does this business record sound like someone who should be president? I get a pain in my gut when I think about it.