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PALO ALTO, Calif.--There is no turning back for Carly Fiorina, and she's in no mood to talk about "what-ifs."

The chief executive of Hewlett-Packard is risking all on the proposed purchase of Compaq Computer. Asked whether there's a Plan B, Fiorina looks an interviewer hard in the eye.

"No," she says, refusing to speculate on what might happen if the quest fails, "because we won't."

That determination, which has marked Fiorina's rapid ascent to the top of the corporate ladder, is being put to the test. It is clear that the outcome of the Compaq battle will determine how history will judge her--as one of the technology industry's shrewdest chieftains or one of its biggest flops.

However the story turns out, Fiorina has already fulfilled one of her objectives since being lured away from Lucent Technologies to join HP: She is shaking up the status quo.

Upon succeeding Lew Platt as CEO in 1999, Fiorina presided over the roughly $13 billion Agilent Technologies spinoff, which had been initiated by her predecessor. She next tried to acquire the consulting business of PricewaterhouseCoopers, an $18 billion proposal that would have substantially strengthened HP's services arm in an important and highly profitable market.

The PricewaterhouseCoopers negotiations eventually failed, but it was clear that the only thing the 47-year-old executive was willing to leave untouched was the 1970s orange and brown carpet that lines the company's headquarters in the heart of Silicon Valley.

Then came the Compaq blockbuster. Fiorina argued that the addition of the rival PC maker would retool HP with a broader array of products and services. But the September announcement also triggered a firestorm of criticism that has forced Fiorina to play defense ever since.

Critics dismissed the proposed deal as an unwise gamble. They said the acquisition would do nothing to help HP compete against Dell Computer's unparalleled build-to-order, direct-sales business model. Nor would it enhance the company's attractiveness as an alternative to IBM in providing high-level consulting and outsourcing services. What's more, they warned, the merger of disparate operations and corporate cultures could become a long, complicated process.
 

Losing the support of the family, which controls an 18 percent voting block of shares, is not necessarily a deal breaker. But that opposition puts tremendous pressure on Fiorina, who must now get approval from almost two-thirds of the remaining HP stockholders to carry the day.

Getting what you wished for
Rather than remain a lame-duck CEO if she fails to pull off the deal, Fiorina will likely resign. And even if she succeeds, she will face more headaches in overseeing another huge restructuring as HP tries to build a one-stop tech shop of hardware and services.

"Can we screw it up? Sure, we can screw it up," she said candidly. "There are loads of lessons of people that screwed it up. But actually, not screwing it up isn't that tough. It requires sticking to your guns about where's the value and what (are) the goals."

As a student of history--she majored in medieval studies and philosophy at Stanford University--Fiorina reviewed Compaq's mishandled integration of Digital Equipment, an operational disaster that contributed to the ouster of former Compaq CEO Eckhard Pfeiffer. But for all its faults, Fiorina said, that acquisition was entirely necessary; otherwise, Compaq would not have acquired its position in high-end computing, storage and services.

"So when people say the (Digital Equipment) acquisition was a failure, I think it's an oversimplification," she said. "The initial integration was clearly a failure, but what Compaq got out of that acquisition was a very strong services business, a very strong storage business. Those are good assets right now that are performing very well."

Fiorina has been pitching the deal to Wall Street since last fall, albeit with mixed results. Given that the Compaq acquisition was announced in the midst of a bear market, she argues that the negative reaction was not unexpected.

"This is a market that hates everything right now," she said. "So we knew they'd hate this. They hated it a bit more than we thought they would, but we knew they would hate it."

A convenient explanation, but it glosses over her uneven record managing the Street's expectations. Although Fiorina received early praise from analysts for efforts to reshape the company, she has also been criticized for being unrealistically enthusiastic about the company's earnings prospects--ambitious targets that encouraged Wall Street to raise its profit expectations. When the market softened last year, the company fell short of some of those goals, and many financial analysts lost confidence in her estimates.

Some point to a May 2000 meeting where Fiorina told analysts that quarterly revenue would grow 15 percent and Unix revenue 26 percent. The company ended up narrowly missing the overall revenue forecast and falling well short of the expected growth in the Unix business.

"There was doubt even at the time that those could be met," said J.P. Morgan Chase analyst Daniel Kunstler. Then, he said, the economy worsened, HP missed its numbers, and Fiorina began to lose support.

That credibility gap makes the task of capturing hearts and minds that much more difficult, especially when Fiorina is being portrayed by Hewlett and Packard descendants as out to destroy a corporate and family legacy. But she remains unapologetic about her desire to reverse what she views as stagnation and bureaucratic ossification.

"I was very candid when I came into HP that there were some really great things about this company and there were some things we'd gotten lax about," Fiorina said.

She dismissed suggestions that a CEO who pushes change--including widespread job cuts--is somehow destroying the HP Way, even if her direct style ruffles a few feathers.

"I've been very forthright with people. It is a choice. This is what we're trying to accomplish with the company; this is the environment we're trying to build," she said. "In many cases, it is a return to the environment that used to exist around here. Bill Hewlett and Dave Packard were famous for going to reviews, and if they didn't like something that was said or done in the review, the next day the person was gone."

The transition promises to be rough on employees, who will be asked to embrace a new corporate structure in which many will lose their jobs. Hard as that adjustment may be, HP nonetheless needs to change, according to John Jones, an analyst at Salomon Smith Barney.
 

But Wall Street is an exacting taskmaster. And executives who fail to make good on promises don't get the benefit of the doubt later on. Fiorina has spent considerable time communicating how the acquisition will allow HP to eliminate overhead, merge product lines and get better deals from suppliers--to little avail.

She is frustrated at the way she believes her message has been twisted out of context. "We have some members of the analyst community who are not always particularly well-informed," she said, awaiting an opportunity to prove her critics wrong.

And they are waiting for the same chance to prove her wrong--and to bid her farewell.

News.com's Stephen Shankland contributed to this report.
 

Fourth profile: Meg Whitman