February 9, 2005
From the desk of Jane Galt:Carly, we hardly knew ye
The first woman to head a major technology company has been forced out. The highlight of Ms Fiorina's tenure was, of course, the disastrous merger with Compaq, in which Ms Fiorina demonstrated that women are every bit as good as men at senseless, megalomaniacal empire-building.
Posted by Jane Galt at February 9, 2005 2:27 PM | TrackBack | Technorati inbound linksDing, dong, the witch is dead!
And there was much rejoicing in the kingdom of Agilent.
One does have to wonder how exactly Ms. Fiorina could possibly have responded to HP's declining fortunes with "Hey, I know! Let's get into the hyper-competitive, wafer-thin-margin PC business!" But thusly respond she did.
I guess the good news is that there's no sexism angle here: she isn't being kept on because she's a woman. That's a relief.
I believe the split of Agilent from HP occurred prior to Fiorina's watch...but it probably would have been wiser to keep them together and focus the computer capabilities on supporting the instrumentation and medical businesses.
David- Conglomerates fell out of favor decades ago as investors realized that they didn't like CEOs making portfolio decisions for them. Give me one line of business, and make as much bloody money as you can. Don't get me started on GE, btw.
Paul- Consolidation is a classic event in a market as every players seeks economies of scale to combat declining margins. There is a logical argument for it. The usual obstacle is the difficulty of integrating the two companies' operations quickly, and on that score Fiorina did better than most. Of course, I'd argue that after merging Compaq she should have sold the desktop/laptop lines to anyone who would pay and held onto the server products which still play a role in enterprise deals. But HP derived a lot more of its revenue from PCs than IBM did, and Wall St. tends not to like companies that shrink to survive. Illogical yes, but if it wasn't there'd be no room for the Warren Buffets to consistently beat it.
-cwk.
"Conglomerates fell out of favor decades ago"
Yes, except that most companies in the S&P 500 are to some extent or another conglomerates because they have different product lines. the snob is vastly oversimplifying the issue.
As someone whose father started at HP in 1969, I don't think all the commentators have the business history correct.
HP started out in instrumentation, but gradually grew a gigantic PC business, centered around printer technology. By the time the Agilent decision took place, a spinoff of the Test & Measurement group was inevitable. HP couldn't run itself as distinct business units the way, say, IBM does; and the middle-margin, slower-moving T&M business was consequently being supressed by business decisions suited to the narrow-margin, fast-moving computing business.
For Agilent, the upshot was that it kept the "classic" HP corporate atmosphere and some long-time members in the board and CEO slots. The downside was that Agilent built up its capital investments and workforce far too aggressively during the cellular infrastructure wars, and then ate a very fat crow in the years following -- culminating in a decision, foolish in retrospect, to move all new-equipment manufacturing to Penang.
HP, meanwhile, got the worst of both worlds -- the loss of a then-stable revenue group, leaving only the also-profitable but more volatile computing group; and a transplant CEO (Carleton S. Fiorina) who did not understand the HP corporate culture and had her employees' animosity from day two onward. Under Fiorina, HP then aquired Compaq, which doubled HP's annual revenue while HP's profits remained unchanged. Brilliant. Then HP started talking about spinning off Printers into a separate business...and then Carly finally got the boot.
Still got that matchbook with the name of that truck-driving shcool on it. So no worries.
Let's see,
They merged, when merging was fashionable.
They outsourced, when outsourcing was fashionable.
They bought new bizjets because the old ones were unfashionable.
What could possibly be wrong with Carly's reign at HP?
Maybe because business is about making money, not fashion?
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