Fired HP CEO to collect $21M severance

[Yeagermeister]

Fiorina fired at Hewlett-Packard
From staff and wire reports
Carly Fiorina, one of industry's highest ranking women, has been forced out as chairman and chief executive at Hewlett-Packard (HPQ), effective immediately.

Carly Fiorina promotes H-P products at the Consumer Electronics Show in January.
By Justin Sullivan, Getty Images

H-P board members said they fired Fiorina because she failed to execute a planned strategy of slashing costs and boosting revenue as quickly as directors had hoped. Many on Wall Street hope the company will spin off its printing division, which delivers most of H-P's profit.

The board named Robert Wayman, H-P's chief financial officer, interim chief executive. Patricia Dunn, an H-P director since 1998, has been named non-executive chairman of the board, also effective immediately.

"We thank Carly for her significant leadership over the past six years as we look forward to accelerating execution of the company's strategy," said Dunn, on behalf of the board.

Hewlett-Packard stock, which had fallen 66% since Fiorina took over as CEO in 1999, was trading higher on the news.

"While I regret the board and I have differences about how to execute H-P's strategy, I respect their decision," said Fiorina, 50, who is expected to collect a severance package worth $21.1 million.

Fiorina became a lightning rod for criticism from investors and some in the Silicon Valley establishment for pushing through a 2002 takeover of rival PC maker Compaq.

Critics, including family members of H-P founders William Hewlett and David Packard, argued that the merger diluted the value of H-P's crown jewel, its profitable printer and imaging business.




Hewlett-Packard stock since Fiorina took over in July 1999.
• AUDIO: Patricia Dunn talks about Fiorina's ouster.
• H-P's press release.




Corporate recruiters saw Mike Zafirovski, Motorola's former chief operating officer, as a top contender to become CEO, while others pitched Michael Capellas, current CEO of communications company MCI and former Compaq chief. But Capellas' link to the merger was seen as a problem by some.

Wednesday's action came after widespread speculation about Fiorina's duties at the technology giant that the company tried to diffuse.

Dunn said Wednesday morning in a conference call with financial analysts that directors had been discussing the change for "quite some time" based on a series of board meetings and consultations with senior advisers, ranging from venture capitalists to academics.

But just last month at the World Economic Forum, Fiorina tried to downplay a report in The Wall Street Journal that said HP's board was considering shifting her day-to-day duties to other H-P executives. She called the report "speculation" and said her relationship with the board remained excellent

USA TODAY quoted spokesman Mike Moeller on Jan. 25 saying "while the board did discuss structural changes at its recent meeting, these were announced on Friday, Jan. 14," a reference to H-P's decision to combine its printer and PC divisions. "There are no other senior changes due in the near future."

Tech analysts said then that H-P's board needed to take steps to solve persistent performance problems. H-P has lost the No. 1 PC spot to Dell and gets most of its profit from printer ink. About a dozen promising executives have left the company in recent months.

ABOUT CARLY FIORINA

Age: 50.
Born Sept. 6, 1954, in Austin, Texas.
Attended five high schools in Ghana, London, North Carolina and California. Father, Joseph Sneed, is a 9th U.S. Circuit Court of Appeals judge in San Francisco. Mother, Madelon Sneed, deceased, was an abstract artist.
Degrees: Bachelor's in medieval history and philosophy from Stanford; master's in business administration from the University of Maryland; master of science from MIT's Sloan School.
Career: Began as saleswoman for AT&T and spent nearly 20 years with AT&T and Lucent Technologies, becoming president of Lucent's Global Service Provider Business. Spearheaded the planning and execution of Lucent's 1996 initial public offering and subsequent spinoff from AT&T.
Took over at Hewlett-Packard in July 1999. Pushed through merger with Compaq Computer in 2002.






In recent months, Fiorina has been the target of intensifying criticism from technology analysts and the media for failing to execute an ambitious diversification strategy — an attempt to change H-P from a relatively marginal company that derived a disproportionate percentage of its profits from printers and ink into a Silicon Valley consulting and computing powerhouse.

Among recent changes at H-P:

•PCs and printers. H-P's PC unit, stuck in a battle with low-cost leader Dell, turns a slim profit at best, in sharp contrast to the lucrative printer division. H-P's board considered spinning off the printers into a separate company. But it instead decided to combine the two units under former printer head Joshi, a popular executive who's led printers to record profits.

•Servers and storage. In August, H-P reported a surprising $208 million operating loss in its server and storage unit, due in part to problems caused by an internal software upgrade. H-P promptly fired three top executives.

•Consulting and computers. Last year, H-P combined its consulting services unit with the servers, storage and software unit, putting back-end business purchases in the same group.

Critics said more changes were needed, because H-P is getting squeezed at both the top and bottom. It must compete with IBM, a larger, business-focused company, while simultaneously fighting off Dell's low prices.

It's a battle H-P can't win, said Needham & Co. equity analyst Charlie Wolf. H-P has done a good job of attacking operational problems, but, "They're not dealing with structural things," he said in January.

The board will begin a search for a new CEO immediately. Wayman, a 36-year veteran of the company, will retain his CFO responsibilities. The company says it does not expect to make any additional structural changes or executive leadership changes at this time.

Wayman, who as recently as last year talked publicly of his desire to retire, emphasized Wednesday that he would lead the company until the board picked a new chief executive, then return to his CFO role.