Carly Fiorina's disastrous record as HP's CEO

The more closely voters examine Carly Fiorina’s record as HP’s CEO, the worse she’ll look.

The many, many people who believe she was a disastrous CEO—and that group would include me—observe that she doubled revenue and employment simply by buying a large company, Compaq, in a deal that was a huge loser for HP shareholders. Her claim of going “from a laggard to a leader in every product category” is distinctly odd, since HP was already the overwhelming leader in printers when she arrived, and by the time she left, the company still didn’t dominate any other business. Increasing patents is nice, but only if it pays off for shareholders, which it didn’t. Neither did anything else during her tenure. The stock dropped, and while she likes to point out that her time was a tough period for tech firms, it was a lot tougher for HP shareholders than for those of IBM, Dell, or the S&P tech index. She underperformed them all.

If you want the withering details of her performance, the best analysis by far was written by the great Carol J. Loomis in a 6,700-word 2005 Fortune cover story called “Why Carly’s Big Bet Is Failing.” Here’s Loomis’s conclusion:

“It is right to ask whether this whirlwind [Fiorina] has succeeded. And inevitably that question must be answered in two parts. First, under the only lens that matters, did the famed merger that Fiorina engineered between HP and Compaq produce value for HP’s shareholders? Second, with that merger nearly three years past, is HP in shape to thrive in a brutally competitive world?

A few weeks after that article appeared, the HP board fired Fiorina. The company gained almost $3 billion of market value on the news that day.

It is unfortunate what happened to H-P under Carly, but in all honesty I don’t think it can really be laid at her feet. Here’s why I think that.

H-P represented the very highest standard of electronic engineering that could be achieved with analog technology. What made their equipment so outstanding (in my view) was their mastery over the shortcomings of analog design, over an incredibly wide range of bandwidth for their time.

The advent of digital technology, and the amazing performance levels that have become available at low prices, kind of removed H-P’s edge. The type of extremely high performance they achieved with vacuum tubes and transistors (and later with chips, both commercial and custom) can today be achieved mostly in software.

Even the hardware is now mostly software, with ASIC technology, VHDL, and the like.

To the extent that cutting-edge engineering is cost-effective these days, it is mostly being done by people who write software. The brilliant and highly educated engineers and technicians who gave H-P its advantage are now writing software, for the simple reason that one can achieve far more engineering per unit time today by means of code than one ever could with a soldering iron, no matter how talented.

Understand, I’m not an H-P insider. I’m simply an engineer who was first exposed to H-P equipment as a boy of eleven or twelve, and was utterly bowled over by the level of technical perfection I experienced at that time.

Once we crossed over into the digital world, in which signals are expressed as vast numbers of symbols that can be stored and manipulated without error, the type of craftsmanship that made H-P so special became widely available to anyone.

It’s a little like what’s happened in the music business. High-quality recordings can be made by anyone with a computer and a few hundred dollars worth of audio equipment. There isn’t much reason for sound studios, record companies and the like any more. The expertise has become too well diffused, the barriers to entry have fallen. Also due to digital technology, of course.

Carly was really put in charge of managing the decline, in my opinion.

Carly was really put in charge of managing the decline, in my opinion.

That was my take as well.
HP certainly had the reputation of being a special company with excellent products, excellent margins, and excellent engineering -- for nearly a three decade run. But they had a large moat insulating them from the market. Once that moat got breached, and their margins cut, there was no way they could maintain their past performance. Fiorina came in at the time of the hemorrhaging, and it was her job to re-engineer HP. She pushed the Compaq merger - and from my perspective failed; but failure while trying to pull off a nearly impossible task is going to happen. And as CEO, you get the accolades or the blame.

I'm not voting for her (she ticked me off with her Kim Davis statements), but I'm not hanging the HP failure around her neck. Maybe others, who actually worked with her have a better picture, but from the outside - business is tough, and I applaud those who make tough decisions - rather than doing nothing.

Then look at her time at Lucent.

I'd rather not.

My wife and I went down to NJ to visit some Chinese friends of hers back in 1998 or 1999. These people were all PhDs, in research or middle-management positions at Lucent.

They were literally all millionaires at that moment. They acted like it, too. Brand new $500K houses, his-and-hers Lexuses and Mercedes. Pools, private schools, vacations. Made me feel about two inches tall.

As we drove home, all I could do was feel bad that my wife had ruined her life by marrying me.

A couple of years later, they were all looking for work. Their million-dollar Lucent stock portfolios were essentially worthless. I don't know what happened to them, but my wife never mentions them any more.

I was at COMDEX when Fiorina was first made HP boss and was scheduled to give the keynote address.

The huge auditorium was overflowing like a there was a rock star showing up.

This thin hot babe walked past me and I was checking her out as she went up to the stage, shocking the heck out of me.

I didn’t care much about the business end of computers back then so I didn’t stick around for the speech. But you would have thought that Mick Jagger was showing up.

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