What Do Bill Clinton and Carly Fiorina Have In Common?
(And it isn't that they both dislike Hillary)
Jan. 1993 – Jan. 2001: Bill Clinton's tenure as President of the United States
April 1997 – June 2003: Dotcom Boom / Bubble
Mar. 2000 – Oct. 2002: Dotcom Crash (steepest increase began 1999; steepest decline began 2001, continued through 2003
July 1999 – Feb. 2005: Carly Fiorina’s tenure as HP CEO
Fiorina came to Hewlett-Packard at the start of the Dotcom Boom's steepest increase, and endured all 3 years of the ensuing Dotcom Bust.
Bill Clinton rode the best years—all of them—of the Dotcom Boom, and exited the White House just before the steepest decline in the Dotcom Bust.
While the media never gave credit to the Dotcom Boom for Bill Clinton's so-called economic success, they also won't give any of the blame to the Dotcom Bust for Carly Fiorina's bad timing to be CEO of HP during its entirety.
But when Fiorina says this, I believe her because I know it's true:
When pressed by the [Des Moines] Register's Lynn Hicks—who noted that HP's stock price had fallen by "65 percent" following the [HP/ Compaq] merger—why Wall Street investors did not reward her performance, Fiorina blamed the tech bubble. "No, actually 50-something," Fiorina corrected, "but if you look at the NASDAQ, that it's only now recovered to its dot-com highs... after 15 years. So, you go check how many tech stocks were down in that period."Go do just that. You'll find that virtually all of them were down, and by miles, in that period, and for a long time afterward: "While the [NASDAQ Composite] index gradually recovered since then, it did not trade for more than half of its peak value until May 2007."
Should Fiorina's five (count 'em) CEO successors and the Board of Directors now at HP be held over the fire for not making its stock bounce back to its peak levels for the past fifteen years?
While HP stock outperformed the market in Fiorina's early years there (during the Dotcom Boom), the company's shares fell (with the Dotcom Bust) and stayed subpar the rest of her time there. Just like most other high-tech companies, even ones that survived the Dotcom Bust. In that same crash, for example, Amazon saw its stock go from $107 per share to $7. That's nothing: Microstrategy's went from $3,500 per share to $4.
This is an era of which I am intimately aware. I lived through that, directly. If you didn't, if you weren't directly involved in high-tech in some way, you really don't understand what that boom and bust were really all about, from the business side, the insider side, the worker's side.
It was utterly insane.
I remember going to tech conferences with thousands of dotcom companies hawking their products. Getting t-shirts, coffee mugs, branded items galore, to remember them by. It was like one massive high-tech carnival.
Two of my prized mementos are the T-shirt and coffee mug from a dotcom startup called "ThisJobStinks.com". It was a "gripe about your boss" website, long since defunct. But then, the paraphernalia went like hotcakes.
Do you remember F***edCompany.com? I do. They were the successful (for a time) version of ThisJobStinks.com, long before today's social media sites appeared. It was huge back then. Everyone read it; everyone feared their company would be next on the website.
For the uninitiated, read about F***edCompany.com. Read some of these stories to really get a sense of what the Bust did, to companies, to people, to money, in 66 accounts of "What was Silicon Valley like after the bubble burst in the early 2000s?"
There was a stratospheric, frantic euphoria that perhaps led one high-level Vice President to publicly skewer people and cuss on an online site he thought non-tech-folks didn't even know about (and no, it wasn't Donald Trump), not knowing or caring that he could be identified as the high-level, high-profile Veep he was. That same VP became President of his Top-15, high-flying tech firm, only to (mis)lead it to ruin, fire 20% of its workers, have to sell off to a successful company, and be forced out himself.
Everyone and almost everything high-tech went from arrogantly soaring to crashing and burning, and almost in the blink of an eye.
Fiorina here refers to the ill-fated but now well-regarded 2002 HP merger with Compaq, which had just four years before digested bad acquisitions Tandem Computer and Digital Equipment Corporation (DEC), two large-footprint computer manufacturers both on the downhill slide.
Remember 2002: the steepest decline of the bust had just started a year before, by some measures. So her judgment may have been off, buying Compaq and at the precise time when hunkering down, not acquiring anyone, might have been the better choice.
At least Fiorina didn't make this list, Business Insider's "The 15 Worst CEOs In American History:"
"Eckard Pfeiffer ruined Compaq, one of the original PC companies, and for years one of the most successful. Compaq was started in 1982 with a $3,000 investment from its three founders. That same year, the company released the first commercially available portable computer, the father of the laptop. In 1984, the company released its first desktop, arguably making it the PC company with the broadest product line of any in the world. In 1989, Compaq moved into the low-end server market and pushed IBM and Packard Bell out. By the late 1990s Compaq would have been better off focusing on the PC and server markets. Unfortunately, Eckard Pfeiffer, the company’s CEO from 1991 to 1998, had plans to greatly expand the company’s businesses and sales. In 1997, he bought Tandem, a manufacturer of high-end servers. He then purchased DEC, the leading mid-frame computer company, in 1998. In both Tandem and DEC, Pfeiffer strayed from Compaq’s core business, buying high-end brands that were not only expensive but were in the process of becoming obsolete. Notably, Pfeiffer was unaware of the value of one of DEC’s assets, Altavista, the original search engine and the predecessor to Google and Yahoo!" [emphasis this author]But for all the Walter Hewlett commentary about "the HP Way" and the HP traditions being sacrosanct (read CNN's hatchet-job if you can stomach it),
"Fiorina, 60, did try to restructure HP and execute a mega-merger with Compaq, which set off a bloody proxy fight, pitting her against Walter Hewlett, son of company co-founder Bill Hewlett. She ended up laying off thousands of employees and tried to push the company’s staid culture forward into the Internet era. It’s neither surprising nor conclusive that a woman CEO in those circumstances would be targeted with unattributed, qualitative criticism." [emphasis this author]Staid culture? The backward, non-Internet era? I know about those. Today's 20-and-30-somethings don't, really. I know firsthand about those kinds of high-tech companies. Why do you think Tandem and DEC were on the way to Outsville?
Could it be that Fiorina saw what happened to those companies who had protected the bloated status-quo, the "Our Way" culture, all the way into the ground? Could it be she was trying to keep HP from becoming another one of the gutted, sold-off-pieces-parts-in-fire-sales dinosaur skeletons?
I saw companies like those, beginning in 1991-1992, start protecting middle management's phoney-baloney marketing jobs (they had tens of thousands of them, among them) and instead whittled away at those in the trenches working at least in part on commissions—the sales force, the systems engineers, the consultants, all those actually bringing in the sales of the products—while the fat, middle-section of the firm, the managers and VPs, ducked and ran for cover from one useless, six-figure, self-justified, middle-management job to another, to another, to another, after failing in each one before.
Kind of like what this company did, only about eighteen years later.
Big, bloated, "Our Way" companies like HP, DEC, Tandem and others had gobs of fat they could have eliminated in the early to mid-90's, without damaging the growth of the companies in all facets. That's what CEOs' jobs are, to increase viability, sustainability, sales, profits, cut fat if necessary. But fat (staid, overgrown, job duplication), dumb (non-Internet), happy (everyone keeps their job for life, no matter what) was "Our Way" back then for several high-tech firms.
Perhaps Fiorina decided HP wasn't going to go "Their Way." Perhaps she wasn't successful at it, but perhaps she was, in the long view, as some have come around to write:
"It’s true that HP was flagging when Fiorina came on board. And you can find a few Carly defenders out there: Bob Knowling, who was on HP's board of directors during Fiorina's tenure recently told CNN that, 'Contrary to what has been written in terms of a lot of negative things, she did what she was hired to do and that was to lead a transformation.' Another person close to the company says: 'She certainly does not deserve all the blame, there is plenty to go around, and you could argue that no one could have saved HP from its decline from a once great company.'”Yahoo Finance also doesn't say that Fiorina was responsible for "tens of thousands" of lay-offs, as Mother Jones and other liberal sources have said. And PolitiFact.com doesn't really say exactly, but implies it could be minor numbers laid off, or it even could be a net gain, in the aggregate:
"According to SEC filings, HP had 84,400 employees worldwide in 2001, the year before the merger. In 2001, Compaq had 63,700 full-time employees. That comes to a total of 148,100 workers. In 2005, just after her departure, HP's worldwide workforce reached 150,000. That includes acquiring some other companies, the Los Angeles Times reported."Were those later acquisitions immediately following her departure, or long after, and how large were they in terms of employees? Yahoo doesn’t give the LA Times link, and doesn't quote them as saying either. This makes me wonder if it isn't so damning to Fiorina, after all, because if it was, they'd have told us about it.
Still, other sites have quoted SEC filings listed at around 30,000 layoffs. Certainly if you or I were one of those 30,000, we'd be rightfully upset. I can only cite my exposure to the bloatedness and job duplications those companies had allowed themselves to effect by the early/mid 90s, and the ludicrousness of watching thousands of people in six-figure, middle management jobs jetting around on fat expense accounts, trying to justify unjustifiable jobs.
If anyone has ever been outraged by the 1%-ers, you should also be outraged about capitalists creating tens of thousands of these jobs that should never have been filled in the first place. And then not be so upset if those jobs were among the 30,000 eliminated.
The point to this discussion is: Don't believe what sound-bites Big Media chooses to show you. Dig. Dig deeper. Ask around. Consider the context of that era. It was bizarro to say the least.
And for Fiorina to even attempt to make a difference, to transform a company for the better, well, isn't that what half of you voted for this past two Presidential terms? Someone completely untested and unaccomplished really, at anything—never mind leading a Fortune 500 company or division—who said he'd "transform the country"? How well do you like what he's done so far? Not much: RealClearPolitics.com's Average of seven major polls as of August 12, 2015: 49.3% disapprove, 45.4% approve, with five of the seven disapproving by 3 to 9 points, and the Fox News one a tie!
So why wouldn't you also vote for someone who spent two years as Chairman of the CIA's External Advisory Board and who once said "I have met Vladimir Putin [in a 45-minute private, one-on-one meeting], and I know his ambition will not be detoured by a gimmicky, red reset button.”
Or a Senior Vice President at AT&T chosen from among the many capable men there to spin off Western Electric and Bell Labs into that new company (Lucent) and "direct the strategy, orchestrate the IPO, and lead the search for a name and a corporate image"?
Who, in 1998, was Fortune Magazine's "No. 1 on its first-ever list of the Most Powerful Women in Business"? Who has her MS degree from Massachusetts Institute of Technology's Sloan School of Management, plus an MBA from University of Maryland?
And did I mention: a breast cancer survivor, after being diagnosed and fighting it while running for the 2010 Senate seat occupied by uber-liberal Barbara Boxer in uber-blue-state California?
Maybe she didn't happen to be at HP at the right time (smack dab in the entire Dotcom Crash), but there are several other successes under her belt. She's worth a serious, unbiased look.
Unless of course, you have this "War on Women" thing going on.