Fiorina stumbles starting to add up

The largely negative reaction to Hewlett-Packard’s proposed purchase of Compaq Computer Corp. and the possibility that the merger might not even take place represents the latest stumble in Carly Fiorina’s tenure as the company’s CEO. The key question that has to be asked is, how many more stumbles will HP’s users and Board of Directors be willing to put up with before they tell Carly it’s time to go?

Consider the less-than-enviable series of missteps Fiorina has made since her HP stewardship began in July 1999:

– A bumbled purchase of mobile technology provider VeriFone in Q4 1999 which saw HP incur a US$40 million loss associated with buying the company, with US$29 million of that total coming from restructuring charges. That was a high price to pay for technology that HP intended to use to turn handhelds and mobile phones into POS (point-of-sale) devices;

– A series of horrible financial results, too many to be brushed aside with a “tough economic climate” excuse. Consider the company’s fourth fiscal quarter results for 2000, when HP reported net income of US$922 million, or 41 cents per share. The consensus from financial analysts polled about HP’s expected performance for that quarter was that the company would post earnings of 52 cents per share;

– Last year’s botched attempt to purchase PricewaterhouseCoopers’ consulting business. Originally intended to be the key element in Fiorina’s plan to make it easier for customers to talk about business strategy and technology with one vendor, instead of a multitude of them, the purchase was eventually abandoned after a painful courtship. The deal was also supposed to be part of what Fiorina described as a new era of services-based computing, where new types of networked services could be accessed over the Internet from a variety of devices. The PricewaterhouseCoopers’ consulting arm was supposed to help make this a reality, but HP abandoned the chase in November 2000. “I am unwilling to subject the HP organization to the continuing distraction of pursuing this acquisition any further,” Fiorina said at the time.

And now another attempt to buy out a sizeable IT player, one that is hardly guaranteed of success and one that countless analysts and users have condemned as being a bad move in the first place. Aside from the more obvious challenges that HP would have to hurdle if such a deal went forward, such as overlapping product lines and the messy job of welding two sizeable workforces into one, the fact that Compaq is not a leading services player makes the attempted acquisition all the more confusing. How are Compaq’s product lines going to help HP keep up with competitors such as IBM in the lucrative services market, a market that Fiorina has said she wants to see eventually account for 30 per cent of HP’s revenue?

It is uncertainties such as these that have to leave users scratching their heads and wondering whether Fiorina is the right person to lead the company they’re supporting.

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Jim Love, Chief Content Officer, IT World Canada

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