Curiosity’s sake continues. . . . I admit to a certain bias against Fiorina, but do we really want someone with a track record like this:
Layoffs
In January 2001, HP laid off 1,700 marketing employees.[92] In June 2001, Fiorina asked employees to either take pay cuts or use their allotted vacation time to cut additional costs, resulting in more than 80,000 people signing up and saving HP US$130 million.[93] Despite these efforts from employees, in July Fiorina announced that 6,000 jobs would be cut, the biggest reduction in the company’s 64-year history,[94][95] but those cuts would not actually occur until after the Compaq merger was announced.[96] In September 2001, Fiorina said she intended to cut an additional 15,000 jobs in the event of a merger with Compaq.[94][97]
In all, Fiorina laid off 30,000 U.S. employees.[16][17] According to PolitiFact, those 30,000 layoffs were “as a result of the merger with Compaq….”[17] By 2004 the number of HP employees was about the same as the pre-merger total of HP and Compaq combined, and that 2004 number included roughly 8,000 employees of other companies acquired by HP since 2001.[17][98][99] Altogether, under Fiorina’s leadership, HP had a net gain of employees, including employees from mergers as well as hires in countries outside the United States.[18]
In 1999, when Fiorina became CEO of HP, the company had 84,800 employees.[99] After the merger with Compaq, the company had a total of 145,000 employees worldwide.[100] At the time of her resignation in 2005, after HP had acquired several other companies, HP had about 150,000 employees.[17]
Forced resignation
HP’s revenue doubled and the rate of patent filings increased due to mergers with Compaq and other companies during Fiorina’s stint as CEO.[101][102] In addition, HP’s cash flow increased by 40%, to around $6.8 billion.[103][104] However, the company underperformed by a number of other metrics: there were no gains in HP’s net income despite a 70% gain in net income of the S&P 500 over this period;[101] the company’s debt rose from US$4.25 billion to US$6.75 billion;[101] and its stock price fell by 50%, exceeding declines in the S&P 500 Information Technology Sector index and the NASDAQ.[101][105] By contrast, stock prices for IBM and Dell fell by 27.5% and 3% respectively during this time.[105] The Compaq acquisition was not as transformative as Fiorina and the board had envisioned: in the merger proxy, they had forecasted that the PC division of the merged entities would generate an operating margin of 3.0% in 2003, while the actual figure was 0.1% in that year and 0.9% in 2004.[19]
In 2004, HP fell dramatically short of its predicted third-quarter earnings, and Fiorina fired three executives during a 5 AM telephone call.[55] In early January 2005, the Hewlett-Packard board of directors discussed with Fiorina a list of issues that the board had regarding the company’s performance and disappointing earning reports.[19][20][21] The board proposed a plan to shift her authority to HP division heads, which Fiorina resisted strongly.[21] A week after the meeting, the confidential plan was leaked to the Wall Street Journal.[106] According to BusinessWeek’s Ben Elgin, directors were also concerned about the board’s inability to work effectively with Fiorina.[107]
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