Speaking in court on Tuesday, Neal argued that HP should
have disclosed that the numbers showed, among other things,
that 2003 operating profit would come in at $5.2 billion, not
$6.9 billion, as HP had publicly indicated in its documents to
shareholders ahead of the March 19 merger shareholder vote.
Fiorina said the lower estimates generated internally at HP
were not forecasts, saying that managers tended to
underestimate the numbers to ensure they met their targets.
Just looking at the numbers, that is about a 25% sandbag factor. In my experience, sandbag factors were normally lower then that. Given the $6.9 billion number already had roughly a 5% reduction, that would be about 30% less total. IMHO that should be a red flag to senior management. Some one like MC needs to dig into the guts and see if there are serious problems. On the other hand, maybe IT managers do try for huge sandbags.
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