Features

HP CEO Carly Fiorina Gets the Axe

By Dilip Thomas

Hewlett-Packard Co. has ousted Chairman and Chief Executive Carly Fiorina, the architect of a controversial USD 19 billion merger with Compaq Computer. Chief Financial Officer Robert Wayman, HP's chief financial officer, who rose through the ranks after joining the company in 1969, was named as interim chief executive. According to Robert Wayman, HP did not plan to split the company up, but the board would not be "closed-minded" on strategy changes once it locates a new CEO.

According to sources, some of the reasons for her ouster:

HP's move last month to merge its lacklustre PC unit with its profitable printer business. Many on Wall Street hope HP will spin off its printing division, which delivers most of its profit. The printer and imaging division, headed by Indian whiz Vyomesh Joshi, remains HP's cash cow accounting for more than 75% of the net profits, although it remains under immense pressure from Dell's low margin printer business.
HP shares lost 63 percent of their value, since Fiorina became CEO in July 1999. A vindication to this reasoning is the performance of the HP stock, on news of her dismissal. It rose as much as 10 percent on Wednesday and closed up nearly 7 percent.
Fiorina's record remained spotty, with HP dashing investor hopes in three of the last nine quarters as it lost market share to rivals Dell and IBM.
Strategy execution under Fiorina was under question and the erratic financial results were adding weight to the ouster story.

Mike Zafirovski's (Motorola's former chief operating officer) name has been doing the rounds as a top contender to become CEO, while some others fancied Michael Capellas, current CEO of communications company MCI and former Compaq chief. But Capellas's link to the merger was seen as a problem by some.

On her exit, Fiorina was quoted as saying, "While I regret the board and I have differences about how to execute HP's strategy, I respect their decision". Fiorina's exit will end a rather tumultuous five-and-half year reign at the top slot. She will leave with a USD 21 million severance package.


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