Here’s The Proof Carly Fiorina Was A Disaster For HP Shareholders By Lauren Gensler
http://www.forbes.com/sites/laurengensler/2015/09/17/trump-fiorina-hewlett-packard-disaster-election-2016/
Presidential hopeful and former Hewlett-Packard HPQ -3.70% CEO Carly Fiorina has built her entire campaign around the fact that she comes from the business world, not politics.
“A fish swims in water, it doesn’t know it’s water. It’s not that politicians are bad people, it’s that they’ve been in that system forever,” she said at Wednesday night’s second debate among Republican candidates for the 2016 Presidential Election.
The line was consistent with Fiorina’s pitch to voters as a no-nonsense executive who knows how to revitalize the U.S. economy, but to hear one of her chief Republican rivals tell it, the business track record she leans on isn’t all it’s cracked up to be.
“Hewlett-Packard was a disaster. Lucent, the company she was at before Hewlett-Packard, was a disaster. These were two disastrous reigns,” said Donald Trump in an interview with CBS’ Face The Nation.
For all Trump’s bluster on the campaign trail, he has a point here. Under Fiorina’s reign at HP shareholders took a beating. During her tenure, HP shares lost 42% while the broader market slid just 6%. The day she was fired in February 2005, the stock popped 7%.
Fiorina joined HP as CEO in 1999 and her campaign website lists a raft of accomplishments at the company, saying she ”doubled revenues; more than quadrupled its growth rate; tripled the rate of innovation, with 11 patents a day.”
Those figures are impressive at first glance, but also largely misleading. While Fiorina did double revenues to nearly $90 billion during her tenure, it was almost entirely because of the highly controversial acquisition of Compaq Computer in 2002. The merger, a bet on personal computers just as their sales were starting to slide, faced strong opposition and Fiorina had to launch a proxy battle to win approval, pitting her against the son of co-founder William Hewlett.
What’s more, 15 years later the saga isn’t over. HP is currently in the process of splitting its legacy computer and printers business off from the rest of the company and this week announced plans to lay off another 30,000 people under current CEO Meg Whitman (another wannabe politician who tried to leverage corporate success at eBay EBAY +0.00% into the governorship of California).
“I managed HP through a very difficult time. Many tech companies while I was CEO also lost half their value,” Fiorina said in May, her typical defense when confronted with the hard numbers on value destruction during her tenure. She’s right, to a point. The Nasdaq fell 34% during that time as the dot-com bubble burst, but even reeling peers like IBM IBM +0.00% (-27%) and Microsoft MSFT +0.00% (-36%) didn’t fall as far as HP, while Dell managed to gain 12%.
If Fiorina wants to pin some of HP’s decline on the tech bubble, than she also needs to accept its role in boosting her earlier career and perhaps even landing her that CEO job. Long before her days at HP, Fiorina started as an entry-level employee at AT&T T +0.00% and eventually led AT&T’s spin-off of Lucent. The $3 billion IPO of the equipment business was a success and made headlines for being the U.S.’s largest public debut on record.
In a boom time for telecom companies capitalizing on the dot-com craze, Lucent became one of the hottest stocks on Wall Street and the company grew rapidly. While Fiorina was president of the company’s core business, Lucent’s revenue soared from $21 billion in 1995 to $38 billion in 1999 and the company swung from a loss of $867 million to a profit of $3.5 billion. By the time of her departure the stock had returned a stunning 800% since its spinoff.
But after Fiorina’s timely jump to seemingly-greener pastures at HP came the bust. Due in part to the dotcom era fallout, falling demand and some shaky lending, Lucent shares ended up plummeting to less than $1 in 2002. It would be acquired by Alcatel in 2006, having recovered somewhat but still at a fraction of its peak value.
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