February 9, 2005 8:18 AM PST

Fiorina steps down at HP

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battle to defeat HP's acquisition of Compaq. "I believed her when she said she had an excellent relationship with the board."

"I know she's been under a certain amount of criticism, but (this) is somewhat unexpected. I believed her when she said she had an excellent relationship with the board."
--Walter Hewlett, former HP director and son of company co-founder

Hewlett also said he believed the board would give Fiorina much more time to execute on the merger, which was completed in 2002.

"I didn't expect the board to act so soon," he said.

Fiorina's departure is the second change for the HP board this week. On Monday, Sanford Litvack resigned as a director and was replaced by venture capitalist and former board member Thomas Perkins.

HP plans to launch a search for a permanent CEO. Wayman said on the conference call that he expects to step back into his CFO role once a new chief executive is found.

Wayman and Dunn said that the company intends to stick to its "portfolio" strategy of selling a broad range of products and services.

The company has acknowledged that it considered spinning off its printer business at least twice in the past but decided against it.

"We think it is a unique portfolio, one that is stronger together than apart," said Wayman.


Robert Wayman
interim CEO, HP

Analysts said that Fiorina's departure clears the way for the dramatic possibility of splitting the company in two, with the printer/PC unit becoming its own entity.

"The decision opens up the possibility, which was really off the table before, that the new management will re-examine the possibility of possibly partitioning the company, which we view as positive for the stock," said Richard Chu, an analyst at SG Cowen.

Management, however, isn't looking at splitting up the company, said Carly Claunch, research vice president at Gartner. Instead, the board's goal is to build a conglomerate that can exploit fluctuations in the market. When consumer spending is hot, it can gain an overall edge on IBM, which has no consumer business but competes against HP for corporate contracts; if corporate zooms, HP can then move ahead of rival Sony in consumer electronics. HP has rejected splitting off the printer business a couple of times.

"Carly laid all the tracks down. Now they need someone to run the locomotives," he said. "She took a lumbering country club of a company and turned it into something successful."

Regardless of whether the company does split, HP still needs to address the challenge of marketing itself as both an enterprise company and consumer one, analysts said.

"To be selling iPods out one door and on the other side helping Procter & Gamble manage its IT infrastructure--it doesn't seem like it can come together for one company, unless you're running a conglomerate" like General Electric, said Chris Foster, an analyst with Technology Business Research.

HP will likely begin trying to address the message and company vision, said Frank Gillett, an analyst with Forrester Research.

"Strategically, HP is (at) an interesting crossroads," said Gillett. He noted that its competitors IBM and Dell have clear business strategies, while Sun Microsystems has been reinvigorated after struggling for the last few years.

CNET News.com's Dawn Kawamoto and John G. Spooner contributed to this report.

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8 comments

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Not a good fit.
I knew she was a goner. I've been saying this for almost two years now. I'm sure she's a nice lady, but she never inspired confidence and confidence is what a company like HP needs on so many levels.

I appreciate that not everyone is a good public speaker, but these days that is an essential part of being CEO--especially at company like HP. Every time I listened to Carly, I felt like I was watching someone in a junior high communications class: nervous, unsure of herself, not in command of her facts (even when she was), unable to connect with her audience, etc. This is not acceptable in a CEO.

I'd like to think she knew what she was doing behind closed doors, but if she did, it had yet to show itself in products and services.

No need to feel sorry for her though. I'm sure her contract will ensure she is well provided for. In addition, she is CEO material--but not right for HP.

Next!
Posted by sipeter (17 comments )
Reply Link Flag
Dancing in the streets
They'll have to close off Page Mill Road in Palo Alto this morning so that HP employees and "alumni" can dance in the streets, while Carly slinks off to count her multimillion dollar golden parachute. It's about time! My guess is that Mr. Wayman is just a temp during the search for a new CEO.
Posted by twasserman (11 comments )
Reply Link Flag
Fiorina steps down at HP
"Fiorina steps down at HP update Carly Fiorina ends reign as CEO and chairman."?

Big Big mistake I think. Even at first I didn't like her, she has kept the Number 1 company in the top position if you ask me? Are you asking me?

Every computer I own is a HP. Good product, very good. Even all my scanners and printers is from HP. I even own a Compaq laptop for Pete's sake.

She will make your not now a competitor a good top Chairman of the Board.

Well that's my take on this subject. I wish I had the funds to hire her for my small business.

Yours truly, Tommy Brown President Web Makr Express LLC www.webmakrexpress.com
Posted by oohdale (3 comments )
Reply Link Flag
Hahahaha.
You took the words right out of my mouth.

Absolutely hilarious that she couldn't even last 5 years as a CEO. Her stepping down is just more proof that her agenda was to execute the Compaq merger, take her share of dough, and take off.

DOT-COM LIVES ON IN 2005!
Posted by katamari (310 comments )
Reply Link Flag
Poor Rich Girl
Severance package, she'll likely get only 5 to 6 million plus her deferred stock options of another 5 million to comfort her, she can file for unemployment too.

I understand Commodore is looking, or maybe a firm in Bangalore India . . .

Tom
<a class="jive-link-external" href="http://www.taphilo.com" target="_newWindow">http://www.taphilo.com</a>
Posted by taphilo-2003685639374287843630 (130 comments )
Reply Link Flag
A Tale Of Two Hewlett Packard's
Fiorina steps down at HP

A Tale Of Two Hewlett Packard's

Tale 1
------

Eight years ago a I bought an HP Omnibook 800 laptop. It was a marvel of engineering -- small, lightweight, fast, great looking, and RELIABLE. I still use today as an adjunct computer, even though it is slow by todays standards. Made in the USA.

Also eight years ago, as an IT Manager I inherited several HP and Compaq servers. The company was built on these servers, using them to deliver tech services to customers. Made in the USA.

Ten years ago I bought an HP 10B business calculator. It has a perfect form factor, and the batteries last for years. Made in the USA.


Tale 2
------

A year ago I bought an HP Pavilion 4600 laptop computer. Since purchase, it has been in the repair shop twice already. The Cardbus slot was faulty, requiring the motherboard to be replaced. The built-in mouse pad key got mushy, requiring replacement. The tab key stuck, I fixed that myself. The DVD/CD drive cannot read RW format (design flaw). The modem frequently drops a dial-up connection for no apparent reason. The AC adapter is plain bizzare. It sparks when I plug it in, and emits a HUGE amount of RF (how it passed FCC muster I'll never know). Recently, the hard drive began making "thumping" and loud scratching sounds when the bottom gets warm, it sounds like it is going to fail. The HP tech support people in India seem to know what they are doing only about half the time. The laptop is made in China.

Those HP and Compaq servers I used to run for the service business? They became expensive to buy and expensive to repair. A four-day service repair fiasco was the coup de gras. I replaced all the servers with Dell (a fairly new server player at the time)and never looked back. I subsequently bought several hundred thousand dollars worth of Dell servers, and later expanded that to Dell deskstops and laptops. When one of the Dell servers had a problem, the Dell tech was onsite in 4 hours -- on a Sunday morning. The server was expertly repaired and back online in 30 minutes.

HP Today
--------
So this is HP today. Products that are unreliable . Shortcuts leading to substandard quality. Manufacturing and support moved to 3rd World countries. Massive layoffs and purges to rid the company of the old HP Way employees. Wow, great progress!

What does HP need to do to fix itself? To start with, hire a CEO that has an engineering background -- someone over 40 who knows what good engineering and quality mean. Unfortunatley Bill Gates, Michael Dell, and Steve jobs are not looking for work.

Today, would I buy equipment from HP or recommend HP products to my clients as a consultant? Other than HP printers, NO. Tomorrow? That all depends on HP. Maybe the place to start is to hire back some of those old crew cut, white shirt, tie clip, slide rule, HP Way engineers. Start making and supporting some products back here in the USA. I here land and salaries are cheap in large parts of rural America. The Carly Way - hacking away at staffing, outsourcing too much, excessive focus on cost cutting, buying companies, cheapening the product, surely didn't work.

Keith
www.techcando.com
Posted by Stating (869 comments )
Reply Link Flag
Fiorina Resignation
History wll recognize Carly Fiorina as the greatest leader of HP since it's founders. A sad event in the history of a great company.
Posted by (1 comment )
Reply Link Flag
HP survival?
Does the survival of HP depend so much on whos at the top"?

I think, that like other companies in this category, customer service is the key to whether or not a company will "make it".

HP's customer service has begun to take a back seat, although certainly not to the point of being non-existent, like Gateway's. But, my recent experience in calling HP to help with a new Pavilion, which had crashed and burned, was daunting; especially when I could not get a person who understood American English, let alone, speak it . . . They misdiagnosed my computer 3 times!

A correct diagnosis came as a result of me consulting with some geek friends! And it was just a matter of two sentences stating my computers symptoms.

Four calls and three days later, with HP, I gave up and agreed to pay $29.00 for a tech, who I COULD understand and who COULD understand me, to come to my house to fix the computer (the motherboard fried) that was still under complete factory warrantee!

Unacceptable. Clearly, communication is the key in this game. And HP has lost this round.

But, what choice did I have. Who knows? I couldn't understand the people who took my calls . . . and they clearly could not understand me.

Jon (Raleigh)
Posted by Jon (16 comments )
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