Carly Fiorina, a tough executive with almost rock-star visibility, was forced out of the top job at Hewlett-Packard Co. Wednesday after failing to deliver the promised benefits of a controversial merger she championed three years ago.
The 50-year-old president, chief executive and chairman–the first woman to hold all three titles at a major computer company–cited “differences about how to execute HP’s strategy.”
Insiders said the board met this week at a hotel near O’Hare airport, and Fiorina refused to go along with its request that she hire a strong No. 2 to oversee operations and share some of her responsibilities.
“Looking forward, we think the job is very reliant on hands-on execution, and we thought a new set of capabilities was called for,” director Patricia Dunn said Wednesday, after praising Fiorina’s execution of the 2002 merger with Compaq Computer Corp.
Fiorina will receive an estimated $21 million severance package. The board named Dunn non-executive chairman and appointed Chief Financial Officer Robert Wayman interim CEO.
Fiorina’s departure is a stunning disappointment for many women who viewed her as a role model and who celebrated the Texas native’s rise to become one of corporate America’s most powerful women.
Without Fiorina, there are seven women CEOs of Fortune 500 companies, according to Catalyst, a non-profit group looking to advance women in business. Among the best known are Xerox Corp.’s Anne Mulcahy, Lucent Technologies Inc.’s Patricia Russo and Avon Products Inc.’s Andrea Jung.
“It’s really disappointing to see another women CEO stepping down when there are so few to begin with,” said Erin McInerney, a director at the Chicago Network, which tracks women’s progress in Chicago’s 50 largest public companies.
The group’s recent report noted that none of the top local companies has a woman CEO or chief operating officer.
But others said Wednesday that Fiorina’s departure is proof that women are no less vulnerable than men when they take high-stakes jobs at big companies in challenging times.
“If anybody thinks women are going to have any easier or harder time of it, they’re smoking dope, because these jobs are not for the faint of heart,” said Andrea Redmond, co-leader of the CEO and board-services practice at executive recruiter Russell Reynolds Associates Inc.
“Anybody running HP would be under that kind of scrutiny because of its size and position in the economy,” Redmond said.
HP, the world’s second-largest computer-maker and the leading maker of printers, reported $3.5 billion in net income on nearly $80 billion in sales in fiscal 2004.
Fiorina’s tenure of nearly six years was shy of the average seven- to eight-year stint for CEOs of major public companies. HP’s board recruited her from Lucent in July 1999, made her the first outsider to run the 67-year-old company and gave her a mandate to reinvigorate the business.
Controversy dogged her. She championed the acquisition of Compaq throughout a bitter proxy fight that pitted her against the co-founder’s son, former director Walter Hewlett.
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As Hewlett predicted, the merger fell short of its promise to boost revenue and profit.
“The Compaq merger was a fiasco right from the start,” analyst Jason Maxwell of TCW Group Inc. in Los Angeles, an HP shareholder, told Bloomberg News. “The premise was that they were going to gain some kind of scale that would allow them to get a better cost structure and gain market share, and that is just not true.”
Since she took the helm, HP’s stock has fallen more than 50 percent. Investors cheered her departure Wednesday, sending HP’s shares up 6.9 percent, to close at $21.53.
Analysts said the stock’s jump signaled investors’ hope that a change at the top could lead to a breakup, which would unlock the value of HP’s printer business, the company’s chief profit engine. But Wayman said Wednesday that HP’s “unique portfolio” is “stronger together than apart.”
The company launched a search Wednesday for someone with strong operational skills.
Among the names floated by industry insiders as possible candidates were Motorola Inc. CEO Ed Zander, a former Sun Microsystems Inc. executive who joined the cell phone-maker 14 months ago, and Mike Zafirovski, Motorola’s former president and chief operating officer.
Zafirovski, who was passed over at Motorola when Zander was hired, resigned last month, saying he wanted to be CEO of a major company.
Running HP will not be easy. PC leader Dell Computer Corp. is stealing share in HP’s core printer business.
“What they need is good leadership,” Hewlett told Bloomberg. “She found a big splashy move like a merger to distract people from the fact that she wasn’t really able to get the job done.”
Others defended her performance.
“She accomplished a lot,” said Stephen Mader, vice chairman and CEO practice leader at executive recruiter Christian & Timbers, which placed Fiorina at HP. “The unfortunate thing … is that she’ll be remembered for the board deciding they had lost confidence in her.
“I think it’s a shame that she’s a role model and today is her day to take a fall, but in a way this is what diversity and equality is all about,” Mader said. “She was given a job, and when the board got uncomfortable, it had to hold up to its responsibility.”
Rob Enderle, a leading computer analyst and principal at San Jose-based Enderle Group, said the board did not want to fire Fiorina but rather to get her to give up some power, and that she quit rather than comply.
He said the board dispute dates to when Compaq’s former chairman and CEO, Michael Capellas, who became president of the merged company, left in 2002. The board “got more vocal” about bringing someone in after another Compaq executive, Peter Blackmore, was fired in a management shakeup in 2004, he said.
“They wanted somebody stronger on the operational side,” he said. “She refused.”
Hedy Ratner, co-president of the Women’s Business Development Center in Chicago, lamented Fiorina’s departure.
“Who’s left?,” she said. “Very few. We’re not seeing the growth of women as CEOs in major organizations.”