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Public service reminder: Carly Fiorina was one of the worst CEOs in tech industry history

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By David Nir



With former Hewlett-Packard CEO Carly Fiorina creeping up the Republican presidential ladder -- Huffington Post Pollster's average has her surging into ninth place nationally! -- it's a good time to remind everyone about Fiorina's business record. Fiorina loves to tout her experience running what was once one of the world's greatest computer companies, offering it as her top qualification for why she should be entrusted with the presidency. Given the pride she takes in her resume, it'd only be natural to assume that she must have done a kick-ass job at HP.

But that'd be wrong. She was an epic disaster of almost unprecedented proportions.

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Fiorina's chief "accomplishment," such as it was, was to force through the acquisition of Compaq Computer in 2002, a move fiercely opposed at the time by just about anyone with any sense: Compaq was in the increasingly unprofitable commodity hardware business, while HP's chief rival, IBM, was undergoing a renaissance by focusing on services.

Among those hostile to the idea was Deutsche Bank, a major HP shareholder. Fiorina managed to bring DB around, but how she managed to do so is a tale in itself. In short, she went full-on bully:

"In proxy voting, Deutsche Bank originally voted against the transaction with the massive HP shares it held in various fiduciary accounts--representing the interests of its investment clients. Enraged, Fiorina threatened in a recorded voicemail, 'we may have to do something extraordinary' to bring Deutsche Bank over the line. In a conference call with Deutsche Bank commercial bankers eager to do business with HP, she stated 'This is obviously of great importance to us as a company. It is of great importance to our ongoing relationship.'

"After such coercion, Deutsche Bank's commercial bankers intervened; apparently fearing lost business then, supposedly independent Deutsche Bank fund managers reversed their vote. This was immediately challenged in Delaware Chancery Court. The court saw the danger of such alleged vote-buying, but ultimately it allowed the deal."

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More of Fiorina's track record below.

Shame on DB for caving to such pressure, but they paid the same price all HP shareholders did, as the company's stock price plummeted following the Compaq purchase:

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From its peak in 2002 until the day Fiorina was finally forced out by the board in 2005, HP lost over 70 percent of its value. (By way of comparison, the S&P 500 fell 21 percent over the same time frame.) Rather infamously, the stock jumped 10 percent the day her firing was announced.

But it wasn't just some giant institutional investors who lost their shirts on the long ride down. It was much worse than that. HP was forced to lay off some 30,000 employees during Fiorina's reign of error, and Jeffrey Sonnenfeld writes that Fiorina also helped destroy "the company's revered employee morale, and the egalitarian, humble HP way culture." That ushered in a paranoid leadership style that paved the way for Hewlett-Packard's grotesque internal spying scandal, revealed little over a year after Fiorina's departure.

HP wasn't some flash-in-the-pan dot-com bubble company. In many ways, it was the original Silicon Valley startup: The reason why the legend of the company proverbially "founded in a garage" is so pervasive is because that's where HP was actually born, all the way back in 1939. Yet Fiorina very nearly annihilated it all. In 2010, when Fiorina embarked on an ill-fated bid for Senate in California, Arianna Packard, a granddaughter of HP founder David Packard, fired off a scathing letter recounting the company's near-death experience:

"I know a little bit about Carly Fiorina, having watched her almost destroy the company my grandfather founded."
Brutal. Today, HP has managed to put itself on the road to recovery -- by shedding all the vestiges of Compaq that Fiorina twisted arms to buy. Fiorina, though, made out much better, earning $100 million in compensation in under six years, including a $21 million severance package.

Just imagine how much we'd have to pay her to go away if she ever became president.

 

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