Friday, February 06, 2015

Is Carly Fiorina Accomplished Enough for a White House Run?

Former Hewlett-Packard (HPQ-$$37.95) CEO Carly Fiorina criticized preordained 2016 Democratic presidential contender Hillary Clinton in prepared remarks at the Iowa Freedom Summit in Des Moines last month.

"Like Hillary Clinton, I too have travelled hundreds of thousands of miles around the globe. But unlike her, I have actually accomplished something," said Fiorina. "Mrs. Clinton, flying is an activity not an accomplishment."

Before officially announcing her run for the White House top gig, however, the potential 2016 GOP presidential candidate might want to check her hubris at the door: an examination of her performance during her tenure as chief executive of the tech titan suggests the erstwhile “Most Powerful Woman in Business” has little to brag about - and accomplished very little in that leadership role.

True, Fiorina’s official HP bio paints the picture of a visionary leader:

In July 1999, Carly Fiorina joined HP as chief executive officer, and was named chairman a year later. She resigned from her position on February 8, 2005. While at HP, Fiorina led the reinvention of the company many associate with the birth of Silicon Valley by returning HP to its roots of innovation and invention, reorganizing it to be more agile and competitive, and charting a new strategy to use HP's depth and breadth to help customers and consumers prosper in the digital age. As part of that reinvention, Fiorina led the company's 2002 merger with Compaq Computer, one of the largest high-tech mergers in history. As chairman of HP, she also worked to build on HP's historic commitment to social responsibility, taking global citizenship to another level by leveraging HP's worldwide presence to make a difference in the lives of millions of people.

Albeit, as Mark Twain noted, “Truth is stranger than fiction, but it is because Fiction is obliged to stick to possibilities; Truth isn't.”

And the truth reveals a lackluster legacy: under her tutelage, net income from continuing operations at HP stagnated – slipping from $3.6B in 2000 to $3.4B in 2004 – and shareholder value declined 38 percent (falling from $28.30/share to $17.56/share).

Looking not through Fiorina’s prism of the past, but actual history, the $25B acquisition (which includes acquisition-related charges) of Compaq Computer was a dismal failure too: A name makeover to “Personal Systems Group” (PSG) couldn’t hide the fact that Fiorina bough a low-margin, personal computer manufacturing business which suffered from sequentially lower average selling prices (due to competitive pricing pressure) and declining volumes in both commercial and consumer desktop PCs.

PSG's earnings from operations as a percent of net revenue amounted to 0.9% in fiscal 2004 - and even this anemic profit resulted mostly due to cuts in operating expenses (such as headcount and lower R&D spending).

In May 2012, HP closed the book on this failed marriage with a $1.2bn write-down in the value of the Compaq trade name.

Her vainglorious promulgations to the contrary, Fiorina did little to “to make a difference in the lives of millions of people.” 

Fiorina did, however, prove the adage that there is no such thing as failure in the corner office. She left in 2005 with a severance package worth an estimated $42 million.

If incompetence and hubris are requisites for presidential aspirations, Fiorina is halfway there. 

Ed. note: this commentary should ot be construed as an endorsement for the likely candidacy of Hillary Rodham Clinton

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