Carleton S. Fiorina's fall from grace was dramatic, as was most of her career. But don't cry for Carly; her way of doing business remains ascendant, and has already triumphed over that quaint set of humanistic values known as "The HP Way."
As HP's best and brightest headed for the doors, whether they jumped or were pushed, some of them were not shy about calling a reporter who had covered the company for many years. As I talked to these talented people from every level of the company, one interpretation of events emerged with remarkable consistency. Carly had no intention of sticking around Hewlett-Packard for very long, these folks said. Her real intent was to do a quick, Lee Iacocca-style turnaround, accompanied by the best autobiography money could buy, and in 2004 run for the U.S. Senate, against Barbara Boxer.
It seemed a little far-fetched, but soon the photo-op shots of Carly in the company of high-ranking Republicans began proliferating. Even as Carly's script for HP ran into harsher realities, even as Boxer retained her seat, the story never really died. And in retrospect, it offers the only explanation that makes any sense at all of Carly's biggest strategic move. I'm referring here to the acquisition of the Compaq Computer Corp.
So why did she do it? For one reason: Wall Street loves big mergers. The investment banks collect immense fees for their roles as advisors, regardless of the ultimate soundness of the deal. And their securities analysts all write positive reports, which prompt a lot of rubes to buy shares, which generates a flood of trading commissions. Big mergers and acquisitions are almost always a net negative for the companies and communities involved, but a win-win for the bankers, lawyers and other deal makers.
A second reason is that it should have worked well enough for Carly to declare victory and move on to the political stage. Despite their dismal long-term success record, big mergers usually can "achieve synergies," Wall Street-speak for massive layoffs, which reduce costs enough to show a big if fleeting bump in earnings per share.
http://www.salon.com/tech/feature/2005/02/10/carly/index.html______________________________________________
I worked for IBM for many, many years and saw that company go through the same devolution as HP. When I first started working there, it was absolutely wonderful, if in a sort of overly paternalistic way. IBM was always there in all facets of your life to help out. As an employee, you were a family member and nothing was too much to ask. We had benefits upon benefits. Full Medical and Dental, no HMO bullshit, pick your doctor and IBM payed the bill, no deductible. Great retirement benefits, sick leave (unlimited!), job security, opportunity for advancement, and this was for everyone, from the research scientists to the security guards. Once Gerstner got in charge, things gradually began to change until now, IBM is just another big corporation that constantly looks for ways to save a buck, especially if it means on the backs of it's employees. It's shocking how companies like IBM and HP have, over the years, morphed into what was expected by Wall Street. It shows the power the financial community has in shaping US businesses. It's just sad that companies with really progressive, pro-employee, long term vision type of ideals are being forced to turn into mega-corporation monsters focused on nothing but the bottom line of the next quarterly report. The US has lost so much from the proliferation of this attitude in American business. I watched so much change for the worse at IBM, it was really heartbreaking. But it made the Wall Street boys happy. Sigh.
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