In Fiorina-Hewlett battle, only one can win, but both could lose
DALLAS, Mar 05, 2002 (The Dallas Morning News - Knight Ridder/Tribune News
Service via COMTEX) -- Carly Fiorina and Walter Hewlett aren't just fighting
each other for the future of Hewlett-Packard Co. They're also fighting for their
own futures with the company.
Some analysts have long predicted that Fiorina, H-P's chairman and chief
executive, would resign if shareholders vote against the California company's
acquisition of Houston-based Compaq Computer Corp. in a meeting March 19.
Hewlett, the co-founder's son who's leading the proxy battle against the merger,
would also face difficult decisions about his position on the H-P board of
directors if the merger succeeds, analysts said.
"This is a classic power play by both parties," said John Slocum, management
professor at Southern Methodist University. "There's going to be a clear winner
and a clear loser."
The stock-swap acquisition, valued at $25 billion when it was announced Sept. 4,
has fallen to $22 billion in value as H-P shareholders battered the company's
stock.
Fiorina says the merger helps build H-P into an international powerhouse with
dominant market share in key categories of servers, data storage devices and
technology services.
Hewlett says the merger exposes H-P too much to industries that don't yield much
profit and dilutes the success of the company's printing and imaging business.
Fiorina or Hewlett could face adversity even if their respective side wins,
analysts said.
Fiorina would have to lead employees through a round of massive job cuts and
implement a merger of two major companies. Slip up once, and she could be out of
a job.
Hewlett, if he successfully defeats the merger, would find himself working on a
new plan with his estranged board members, who have supported the Compaq
acquisition.
With both sides accusing the other of misrepresenting the facts in almost daily
missives to shareholders, reconciliation won't come easily, said Charles Wolf,
an analyst with Needham & Co. in New York.
"I don't know how he could work with the board, whether the merger goes through
or doesn't go through," Wolf said. "If it does go through, I think he'll
definitely resign."
Hewlett has no plans to abdicate his role, said spokesman Todd Glass.
"Walter was elected by the stockholders of the company to represent their
interests, and he firmly believes in that," Glass said.
But Hewlett would have to choose whether he wants to be a thorn in the new
company's side or a supporter of the new company, some analysts said.
"His role will have to be redefined," Slocum said. "For the good of H-P, he
should go along with the vote and try to be very supportive. But that would
probably be very difficult to do because this is an emotional thing for him."
Fiorina, meanwhile, has declined to say publicly whether she'd stay at H-P if
the merger fails.
But Fiorina must go if the merger fails because she has staked so much of the
company's future on it, said Martin Reynolds, a vice president and research
fellow at Gartner Inc. in San Jose, Calif.
"We've got a chairman and CEO who has said she can't run the company the way it
is," Reynolds said. "When you make a statement like that, you're setting your
job on it."
In recent news releases, Hewlett has said he's already looking at replacements
for Fiorina.
If H-P's board must replace her, it may look internally for a popular executive
to reassure employees, or it could start another wide search such as the one
that snared Fiorina from Lucent Technologies in 1999, Wolf said.
Fiorina would have little trouble finding a new job, albeit a lower profile one,
Wolf said.
"The Silicon Valley and the tech industry in general are very forgiving," he
said.
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By Crayton Harrison
The Dallas Morning News
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