Fiorina Forced Out

[TxAPhi]

Reign Ends for Hewlett-Packard CEO
By RACHEL KONRAD, AP


SAN FRANCISCO (Feb. 9) - Carly Fiorina's nearly six-year reign at Hewlett-Packard Co. ended abruptly Wednesday as board members forced her out, disappointed by her inability to transform a plodding technology giant dominated by printer sales into a more nimble innovator.

HP's stock, which has gone nowhere for two years and is down two-thirds from its peak in 2000, rose more than 6 percent after earlier soaring almost 11 percent on the news of her ouster.

Board members said they fired the chief executive - perhaps corporate America's most influential woman - because Fiorina failed to slash costs and boost revenue as quickly as directors had hoped.

"While I regret the board and I have differences about how to execute HP's strategy, I respect their decision," said Fiorina, 50, who is expected to collect a severance package worth $21.1 million.

Fiorina is best known for orchestrating the 2002 acquisition of Compaq Computer Corp. - a $24.2 billion stock deal that required her and Compaq boss Michael Capellas to spend months wooing reluctant executives and shareholders.

The fiercest resistance came from HP director Walter Hewlett, son of an HP co-founder. Hewlett argued that the deal would dilute printing profits while the company absorbed Compaq's low-margin PC business. Employees also soured on the deal, which led to the elimination of thousands of employees per quarter for more than a year.

Many analysts and shareholders remain skeptical that the biggest acquisition in the computer industry was worthwhile. Some business experts expect Fiorina's ouster to precipitate a broad restructuring and management shake up, possibly undoing many of the changes she spearheaded.

"She brought about a major acquisition, that, from the objective of those of us who look at corporate restructuring, had absolutely no merit," said Dr. James Owers, professor of finance at the Robinson College of Business at Georgia State University and an expert on corporate reorganization. "Combining HP with Compaq appeared to be more an ego trip, not a business deal. Many of us are still saying, 'Where's the rationale here?"'

HP directors appointed chief financial officer Robert P. Wayman as interim chief executive. They also named director Patricia C. Dunn non-executive chairman.

Dunn, a board member since 1998, said Wednesday that directors had been discussing the change for "quite some time" based on consultations with lawyers, venture capitalists and academics.

HP's board discussed shifting day-to-day responsibilities from Fiorina to other executives in mid-January, and it's been reviewing her performance for months, Dunn said.

Directors said Fiorina, whose salary and bonus for 2003 totaled $3.5 million, failed to evenly boost profits across all divisions, ranging from printers and computer servers to technology consulting contracts with Fortune 500 companies. Dunn said Fiorina's firing in no way reflected a change in direction of the board's general roadmap for the company.

"Looking forward, we think the job is very reliant on hands-on execution, and we thought a new set of capabilities was called for," Dunn said.


.......

Fiorina was lured from Lucent Technologies Inc. to take the helm at HP in 1999. The following year, the company added chairman to her list of titles, making her the first woman to hold all three top posts - president, CEO and chairman - at a major computer company.

Fiorina, who holds degrees in medieval history and philosophy, business administration and management, is a standout in liberal Silicon Valley for her Republican activism. She has taken heat for her outspoken advocacy of the offshoring of U.S. jobs to low-wage workers abroad.