Carly Fiorina, one of the nation's most prominent technology executives and a popular symbol of women in big business, was ousted as the head of computer services giant Hewlett-Packard today over "strategic differences" with her board of directors.
Fiorina, 50, was chief executive and chairman of the company.
Robert P. Wayman, the company's chief financial officer and interim chief executive, said the main problem was the company's loss of market share in several core areas of its broad computer-related business and inadequate profit margins generally.
Fiorina, a staple of business magazine covers, was the first woman to head a company in the elite group of 30 firms that comprise the Dow Jones industrial average.
In a written statement, Fiorina said, "While I regret the board and I have differences about how to execute HP's strategy, I respect their decision."
The move, foreshadowed in a variety of news articles recently, followed a less-than-banner year in which the Palo Alto-based hardware and services firm lost ground in hardware as well as services to Dell Computer on the one hand and to IBM on the other. It also failed to dazzle either consumers or Wall Street with any innovative splashy products.
The company, which pioneered the development of electronic testing instruments and printers, attempted in the 1990s to expand along the lines of IBM's diversification into a broader array of global high-tech services.
Its advertising campaign de-emphasized printers and stressed "invention" and "solutions."
Her best-known achievement was engineering the controversial Hewlett-Packard takeover of Compaq computer in 2001, which led to a public donnybrook with other board members and much skepticism on Wall Street. The acquisition drew questions in part because computers are now considered a "commodity" -- essentially all alike -- that tend to drag down corporate identity rather than distinguish it.
While the formal press release today said Fiorina had "stepped down," executives made no secret at a later news conference of the fact that she was fired.
"The board continually reviews company performance and leadership performance," said Patricia C. Dunn, who was named interim chairman. "We felt change was in the best interest of the company. . . . This was not a sudden decision. We have had a series of deliberations over the course of weeks and longer," she said, "facilitated" by outside advisers.
On Feb. 8, Dunn, said, "The board asked Carly to step down and she agreed to do so. It's over differences between the board and Carly on execution," Dunn said. "There are no other issues."
"Carly Fiorina came to HP to revitalize and reinvigorate the company," said Dunn in a written statement. "She had a strategic vision and put in place a plan that has given HP the capabilities to compete and win. We thank Carly for her significant leadership over the past six years as we look forward to accelerating execution of the company's strategy."
The company is scheduled to report first quarter financial results next week.
The technology world was abuzz today with reaction to what it views as one of the most important corporate leadership developments of the past few years.
"When people whispered, she didn't hear," said Erik Gordon, a business and management expert at Johns Hopkins University who has followed Fiorina's career. "When people tried to give her advice, she ignored them. When people started to shout, she put her hands over her ears and screamed 'na-na, na-na, na-naah.' She forced them to ax her," he said.
Rob Enderle, a prominent industry analyst, said in an e-mailed statement that "the dispute seems to be over how much effort the CEO puts into the day-to-day operations. HP, according to the board, needs operational leadership, and they have moved to provide this," he said.
"The next CEO will undoubtedly be much more operationally focused; there is a strong possibility that the office of the CEO will be more shared, but in the end, the company will also be a lot stronger depending on how well the selection is done. I think it is good that the board as an entity is doing its job as the experience contained in corporate boards is an important asset to any company and should play the role of governance the position is supposed to require."
Don Tennant, editor in chief of Computerworld, said, "Carly deserves a lot of credit for making the Compaq acquisition happen simply because it demonstrated her fortitude. But what she apparently forgot is that in an increasingly services-oriented economy, pushing more boxes than the next guy is going to get you less and less glory. Without a strategic plan to transform HP into a services giant, she might just as well have been Lew Platt," Tennant said, a reference to Fiorina's predecessor at Hewlett-Packard.
"You have to wonder how highly regarded Carly could possibly have been within HP. She never managed to come across as a 'buck stops here' sort of leader. When HP failed to make its quarterly numbers earlier this year because the server and storage business tanked, her response was to dump the blame on three top executives and fire them. This morning she apparently got a lesson on where the buck really stops."
"The Compaq merger was a fiasco right from the start," analyst Jason Maxwell at Los Angeles-based TCW Group Inc., told the Bloomberg news service. "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."
"She's been a strong change agent. She's been a cultural catalyst," Sanford C. Bernstein & Co. analyst Toni Sacconaghi told Bloomberg. "But on the earnings side, the inconsistency in performance has worried investors."
Bloomberg reported that at a June 2002 meeting with analysts one month after the Compaq deal closed, Fiorina said operating profit in the PC division would surge to at least 3 percent of sales in fiscal 2004, ending Oct. 31. Profit in the printing unit was forecast at 11 percent to 13 percent.
While both printers and PCs had about $24 billion in sales last year, the printer unit made $3.85 billion in profit, for a margin of 16 percent. The PC business made $210 million as its profit margin dropped to less than 1 percent of sales.