Hello Charles,
This article from the NY Times is a nice summary of Ms Fiorina, her thoughts, and it appears she may have some substantial clout as reflected in a few references.
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December 10, 2001
Hewlett Chief Battles for Her Deal and Her Career
By STEVE LOHR
Shortly after she arrived at Hewlett-Packard (news/quote) two years ago, Carleton S. Fiorina invited the heirs of the founders over one afternoon. It was a pleasant couple of hours of talk over drinks, just a social get-together. The family members appreciated the gesture from the outsider who had come to take charge at the company that has their names on the door.
"When she first became chief executive," one family member recalled, "she made a real effort to meet and get to know the family."
Ms. Fiorina, the nation's most prominent woman executive, understood the legacy of Hewlett-Packard. It is regarded as the entrepreneurial birthplace of Silicon Valley, founded in 1938 in a garage in Palo Alto, Calif., by William Hewlett and David Packard with $538.
Her job was to revitalize a corporate icon, one with a rich past yet an uncertain future, sluggish and slipping behind in crucial computing markets. The renovation task, however, would be particularly delicate, because the founders' heirs control a total of about 18 percent of Hewlett- Packard shares.
Now, the heirs have united to stop her. They fear that Ms. Fiorina's plans for Hewlett-Packard's future are too risky for them to stomach.
Last Friday, the Packard family delivered the most severe blow yet to Ms. Fiorina, her plans for the company and her career. The David and Lucile Packard Foundation, the company's largest shareholder, declared it would vote against Hewlett-Packard's acquisition of Compaq Computer (news/quote). The Packard foundation has joined Walter Hewlett and David Woodley Packard, the two oldest sons of the founders, who last month said they and their foundations would vote against the deal.
Facing unified opposition from the families, the largest merger in computer history is in danger of a humbling rebuff.
To rescue the deal, Ms. Fiorina and her company must win the backing of major investors who have been skeptical so far.
If the deal collapses — as many analysts predict — Ms. Fiorina, who has championed it as the bold step Hewlett-Packard needs to become more competitive, will likely depart.
In a lengthy interview last week at the company's Palo Alto headquarters, Ms. Fiorina, 47, stopped just short of confirming that.
If the shareholders take the unusual step of vetoing the deal, she said, "It would say a lot about the board and management's credibility."
In the interview, her first since the initial family opposition arose in early November, Ms. Fiorina defended the deal and her tenure at Hewlett- Packard. The interview came before the Packard foundation vote on Friday, but afterward she and the board said they would press ahead. She expressed confidence that they could still garner enough votes to have the merger approved.
"It's going to go through," she said. "It will."
The interview was in her second- floor office — a kind of first-among- equals version of the classic Silicon Valley cubicle, a large corner space marked off by beige, shoulder-high partitions.
Her manner was direct, often combative, her handshake firm. She never criticized the families directly, but a theme of her comments was that her program of change is truer to the founders' vision than the stance of her opponents.
"This company has never been about looking in the rear-view mirror, though some people are more comfortable doing it," Ms. Fiorina said at one point.
Later, she declared, "To say that the status quo is a strategy is absurd. It's never been a strategy in this industry."
The Compaq merger has been controversial since it was announced on Sept. 4. The immediate reaction from Wall Street was skeptical, as investors drove down the shares of both companies.
The skepticism is understandable. Big mergers in the fast-moving computer business have a poor track record. Corporate cultures clash, and integrating the operations of two big enterprises often turns out to be a time-consuming distraction. While the merging companies dither, markets — and rivals — move on.
A big merger would also be a striking departure from tradition at Hewlett-Packard, a company that has grown organically and nurtured a close-knit culture emphasizing trust, openness and consensus, known as the "H.P. Way."
Such concerns fueled the family opposition to the deal, led by Walter Hewlett, the one family member who is a company director.
Ms. Fiorina sees things very differently. Based on her two years as chief executive, she is convinced that the company needs more than a strategy of evolution from within.
She has worked hard to modernize the company's culture. Leadership, she says, is a performance art. "Change has to be led from the top," she said. "People have to understand what you are trying to do and buy it."
A determined, energetic performer, Ms. Fiorina traveled 250,000 miles in her first year to company facilities worldwide, urging employees to quicken the pace.
She reorganized to shear away layers of bureaucracy. And she engineered a new marketing campaign with a simplified "hp" logo, dropping the family names.
For her task, Ms. Fiorina intentionally adopted a personalized style of management. Young and articulate, with stylishly cut blond hair, she became a business celebrity. As the first woman to lead so large a company, her actions were inevitably scrutinized closely in Silicon Valley and beyond.
The star turn did not sit well with many Hewlett-Packard veterans and some family members. They noted the lucrative pay package required to lure her from Lucent Technologies (news/quote) in 1999 — mostly stock once valued as high as $85 million, though now less than $35 million — and the fact that she expanded the corporate jet fleet.
"Why do people comment on my flying a corporate jet when virtually every other chief executive in Silicon Valley does the same?" she replied with exasperation when asked about it. She offered no explanation herself. "I'm just saying you should ask yourself that question," Ms. Fiorina replied.
Later, though, she suggested that being a newcomer to Hewlett-Packard and to the Valley, invited resistance. "I knew that coming in as an outsider and moving a 60-year-old company with a grand heritage, and all the crosscurrents that implies, was not going to be easy," she said.
As the computer industry's slide accelerated this year, Ms. Fiorina decided that a more drastic step was needed — and the Compaq merger became that step.
She begs to differ with critics who say big mergers in the computer business are doomed to failure. "Where mergers do work — in banking, chemicals, pharmaceuticals and other industries — is where they are fundamentally focused on consolidation and not diversification," she said. Hewlett-Packard and Compaq have several overlapping, complementary businesses, making them ideal candidates for efficiency-enhancing consolidation, she explained.
Melding the personal computer operations of both companies, Ms. Fiorina said, will give the combined company the economies of scale it needs to better compete against the industry leader, Dell Computer (news/quote).
Both companies, she added, have sizable positions in the market for the larger computers that are the engines of corporate office networks and the Internet. Greater size, she said, will give the new Hewlett-Packard more influence with corporate customers against rivals like I.B.M. (news/quote) and Sun Microsystems (news/quote).
With the heady growth days of the late 1990's only a memory, Ms. Fiorina believes that the industry itself is ripe for consolidation. Moving quickly, with the Compaq merger, is a way to guarantee that Hewlett-Packard is a leader, instead of an also-ran. "The technology industry is widely viewed as not mature," she said. "But I think it is maturing," and thus ready for a cycle of mergers.
She may be the public face of the merger, but she is by no means alone in advocating it. The boards of both companies support it (with the notable exception of Mr. Hewlett) and reiterated that support to each other yesterday in a conference call.
"It's not simply my view," Ms. Fiorina noted. "That's important to remember. These are people with a lot of collective experience and knowledge."
A member of the board and a frequent adviser is Richard A. Hackborn, a retired Hewlett-Packard executive, who worked for the company for 33 years and built its printer business, the corporate crown jewel. Mr. Hackborn was a principal architect of the strategy that brought Ms. Fiorina to the company and led to the Compaq merger.
As Mr. Hackborn envisioned it, corporate customers want companies that can offer them technology solutions — complete with hardware, software and services — to business problems, not just pieces of equipment. Compaq, Mr. Hackborn said, improves Hewlett-Packard's chances of becoming just such a supplier, more like I.B.M.
"I don't think we'll get there incrementally, on our own," he said in an interview.
The Compaq merger, however, was not something Ms. Fiorina rushed into. In boardroom strategy sessions, she said, it had been regarded as a "distinct possibility" since December 1999. Yet the merger talks only began last June.
Her main concern all along, she said, was the "integration challenge" of blending the two companies and their disparate cultures.
To solve those problems, she points to joint teams of Hewlett- Packard and Compaq workers who are preparing a single corporate Web site, a single customer service operation, unified teams for corporate customers, and pay checks for all that say Hewlett-Packard.
"None of this suggests it is easy," Ms. Fiorina said. "It suggests we understand what we're doing." |
