1) Carly never saw a merger she didn't like. It's not clear that merging two poorly-performing computer companies will turn them into one good one.
2) Wall street hates it because combining two turkeys doesn't make an eagle. Most high-tech mergers fail. Every merger Carly has ever been involved in (at Lucent) has failed.
3) I think virtually all the members of the board (including those who come from the foundations) failed to recognize the key problems with this deal when it was presented to them. Not surprising, since it was done "Carly Style" in a two day session at the end of which they were supposed to say yes or no. Carly spent months working on the deal, yet it doesn't appear that she gave the board members much opportunity to really reasearch and understand it. IMO, that's her operating style: Make a bold pronouncement, knowing full well nobody will get a real opportunity to refute it in the time allowed.
A well run company would have involved the board and the major shareholders in the details of the deal WELL in advance of needing them to make a decision. I think Carly made the mistake of believing that she could railroad the decision through and have it stick.
4) As major shareholders and board members they should be involved in running the company. I would guess most of them feel like they were shut out of the process and used as a "rubber stamp."
5) HP has lots of places to cut besides printers and cartridges. Start with the money-losing retail PC business, for example.
6) Carly never had any real plan that didn't involve enhancing her own power and prestige. The HP board will now get the opportunity to select somebody who wants to be a real leader, and whose plans for the future will focus on something other than trying to buy her way to grandeur. She's tried it twice. Bad ideas both times. At the same time nothing she's done internally has been workable. Time to cut the losses.
7) FWIW, several members of the families (including David Packard) opposed the deal from the start. Since most of them are not HP board members, that opposition didn't really become relevant until it came time for the foundations to decide on voting their shares. That's always a danger when a large group of shareholders picks a single representative to the board. The single representative can, at times, end up taking a position that others won't support when it comes to voting the shares. All the more reason for the CEO to have MORE involvment with the board, not less.
8) As described in the piece above, Walter Hewlett appears to be a complete idiot and really shouldn't have a board seat if he can't be bothered to make it a priority.
mg |
