- The Washington Times - Monday, November 16, 2009

Carly Fiorina’s claim to fame — her 5½ years as chief executive officer at Hewlett-Packard Co. — could also be her greatest vulnerability in next year’s U.S. Senate race in California.

Hours before Mrs. Fiorina made her candidacy official earlier this month, her campaign aides sent reporters an 11-page report touting her record at HP. At the same time, Sen. Barbara Boxer’s team was portraying Ms. Fiorina as an insensitive CEO who oversaw the firing of thousands of workers and a then-controversial merger with Compaq Computer Corp.

“California needs a senator who’s going to fight to create jobs, not write off 28,000 workers and ship jobs overseas,” Mrs. Boxer’s campaign spokesman Rose Kapolcznyski said.

Mrs. Boxer is likely to keep up the attack even as Mrs. Fiorina tries to fend off conservative state lawmaker Chuck DeVore in the Republican primary, where issues such as government spending, abortion and gay marriage will play a greater role. If Mrs. Fiorina survives to face Mrs. Boxer in the general election, which side wins the race to define her tenure at HP could well determine her prospects for the campaign.

Mrs. Fiorina’s time as head of Hewlett-Packard Co. was so unique and tumultuous that at least three books were written on the subject, including her own best-selling memoir.

With that scrutiny transitioning to the campaign trail, Mrs. Fiorina said she is ready to defend her record.

“Barbara Boxer has been calling me a failed CEO for the entire year,” she said. “It is yet another of her works of fiction, but nevertheless, she conveniently in this charge forgets that I led Hewlett-Packard through the worst technology recession in 25 years and doubled our revenues, improved our profitability, tripled our rate of innovation, quintupled our cash flow, added jobs and created a market leader in the process.”

HP dismissed Mrs. Fiorina in February 2005, giving her a $21 million severance package. Board members, seeing little progress in the company’s stock value, approached her about reorganizing the company into two units, in essence delegating more responsibility for day-to-day operations to a president presiding over each unit. She resisted and soon lost her job.

Since then, she has served on advisory boards for the Department of State and the Department of Defense and worked as an adviser for Sen. John McCain’s presidential campaign. Mrs. Fiorina was diagnosed with breast cancer on Feb. 20 and underwent surgery. She completed her treatments earlier this month and said the disease is behind her.

The report presented by the Fiorina campaign noted that HP stock opened at $17.44 the day the Compaq merger was complete. It’s now at about $48 a share, an increase of more than 160 percent.

Rob Enderle, principal analyst with the Enderle Group in San Jose, said Mrs. Fiorina’s strength was vision, but not execution.

“In terms of the merger with Compaq, it’s actually worked out very well, in hindsight,” Mr. Enderle said. “HP is at the head of the market. Granted, the market is kind of sick, but it’s at the head of the market, and it wouldn’t have been if she had not done the acquisition.” Critics note that profits and shareholder value did not make a strong comeback until she left.

“She walked into a fundamentally sound, healthy, vibrant company and had a disastrous tour of duty,” said Jeffrey A. Sonnenfeld, a professor at the Yale School of Management. “She sliced shareholder wealth in half and had a reign of terror that was infamous for its scapegoating, finger-pointing culture.” Mr. Sonnenfeld noted that Compaq’s equipment was antiquated and said Mrs. Fiorina’s successor as chief executive, Mark Hurd, deserves the credit for making the merger work.

Mrs. Fiorina’s campaign says net revenue increased from $39.3 billion the year before she became CEO in 1999 to $86.7 billion when she left in February 2005. Profits dipped from $3.1 billion in 1999 to $2.4 billion in 2005, but soon after shot up, to $8.3 billion in 2008.

In her book, Mrs. Fiorina shares the credit for HP’s rebound with Mr. Hurd. She said the company’s current standing as one of the world’s premiere technology companies stems from his management as well as the transformation that took place on her watch.

At Stanford University, officials at the business school have always had a keen interest in the operations of Hewlett-Packard. The company’s founders, Bill Hewlett and Dave Packard, were classmates there. Mrs. Fiorina also attended, majoring in medieval history and philosophy.

She went to law school at the University of California, Los Angeles, but dropped out and took a job as a secretary. Twenty-three years later, Fortune magazine named her the most powerful woman in business.

The question Mrs. Boxer will try to exploit is whether Mrs. Fiorina left HP a better company than she found it, and she can draw from her own experience. While spending most of her adult life in politics, Mrs. Boxer has a bachelor’s degree in economics and worked as a stockbroker on Wall Street before moving to California.

Stanford University professor Charles O’Reilly said he didn’t believe Mrs. Fiorina left HP better off than how she found it. He questioned whether the emphasis on computer-hardware products generated the kind of profit margin that could sustain HP in the long run. Still, her executive experience can be an advantage in the campaign.

“She’s actually managed something, which is a real strength against some of the ideologues that sometimes end up as senators,” he said.

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