Carly Fiorina’s lies, distortions, and exaggerations exposed

Here in one sweeping article is ammunition for anyone wanting to expose the lies and distortions that Carly Fiorina peddles about her record. It is by Jeffrey Sonnenfeld, the senior associate dean of Leadership Studies and Lester Crown Professor of Practice Management at the Yale School of Management, whom both Donald Trump and Fiorina mentioned in the last debate.

Here are the facts: In the five years that Fiorina was at Hewlett-Packard, the company lost over half its value. It’s true that many tech companies had trouble during this period of the Internet bubble collapse, some falling in value as much as 27 percent; but HP under Fiorina fell 55 percent. During those years, stocks in companies like Apple and Dell rose. Google went public, and Facebook was launched. The S&P 500 yardstick on major U.S. firms showed only a 7 percent drop. Plenty good was happening in U.S. industry and in technology.

It was Fiorina’s failed leadership that brought her company down… At a time that devices had become a low margin commodity business, Fiorina bought for $25 billion the dying Compaq computer company, which was composed of other failed businesses. Unsurprisingly, the Compaq deal never generated the profits Fiorina hoped for, and HP’s stock price fell by half. The only stock pop under Fiorina’s reign was the 7 percent jump the moment she was fired following a unanimous board vote. After the firing, HP shuttered or sold virtually all Fiorina had bought.

During the debate, Fiorina countered that she wasn’t a failure because she doubled revenues. That’s an empty measurement. What good is doubling revenue by acquiring a huge company if you’re not making any profit from it? The goals of business are to raise profits, increase employment and add value. During Fiorina’s tenure, thanks to the Compaq deal, profits fell, employees were laid off and value plummeted. Fiorina was paid over $100 million for this accomplishment.

She plays fast and loose with highly misleading metrics, changing the goal posts by manipulating peer comparisons. Fiorina brags that she doubled revenues—but she cut value in half. She talks about doubling employment at HP when all she did was combine the employment of two huge firms—and then lay off 30,000 employees. She presents her story as rags to riches saga, from secretary to CEO, when in fact she is the daughter of a Duke University Law School dean and a federal Appeals Court judge. She just worked for a few months as a receptionist after dropping out of UCLA law school.

Sonnenfeld also poses what he calls the obvious question: “If the [HP] board was wrong [to fire her], the employees wrong, and the shareholders wrong—as Fiorina maintains—why in 10 years has she never been offered another public company to run?”

It is a blistering, fact-based piece and you can be sure that it will be carefully filed away by her opponents in both parties to be used when needed.

Incidentally, Fiorina has been making hay from Donald Trump’s comments about her looks that he made in a private setting but when she ran (and lost) against Barbara Boxer for the US Senate seat in California, she made derogatory comments about her opponent’s looks too, that were captured when she did not realize she was being recorded. Her comment about Boxer is at the 4:07 mark.


  1. Numenaster says

    Thanks for the link to the Sonnenfeld article. I’ll add some perspective from inside the tech industry (I work for a company that sells a lot of material to HP).

    I began working in the industry the year Fiorina was appointed CEO, and trouble began for HP pretty much right away. They spun off the profitable automated test equipment business almost at once, and then began buying other businesses that had little to do with HP’s core business.

    They bought a middleware vendor, which might have been a route to better integration between their hardware and software except they never made much use of it and sold it 2 years later.

    They formed a services division modeled on IBM’s former juggernaut, just when IBM was spinning that business off into Lenovo and selling it to China. IBM had the better crystal ball, because HP never made much of a go at services either.

    And then a year and a half in, they bought Compaq, paying a third of the massively profitable printer & ink business to get it. Compaq was a company which once had formidable federal contracts ensuring sales of millions of PCs. I used to buy them at the federal agency I worked for in the 90’s. Their lackluster offerings had been stuck in the middle of the pack for several years, too underpowered for the highly profitable workstation market and too expensive to compete with Taiwan-based manufacturers who were taking over the low end of the consumer market. Compaq also had a LOT of people worldwide, which is why Carly can now claim to have doubled the size of the company. She bought an echoing warehouse full of boxes of random junk and people wandering about aimlessly, but hey, look at all those heads and all that floor space!

    The Compaq business became an anchor around HP’s neck when all Carly’s marketing materials said HP was taking a leadership position in the PC market. What HP got was the best seat on the Titanic, because this was 2001 and the high point of the dot-com bubble had just passed (though we didn’t know it yet). For the next 10 years it was all downhill for the PC’s share of the tech business, and profits fell even faster as suppliers cut prices to move surplus inventory.

    Owning a bigger share of a declining business doesn’t let you raise prices and profits. If you try it, you just accelerate the decline. This is why Walter Hewlett, son of one of the founders, led an almost-successful shareholder revolt to stop the merger and went to court to try to stop it again. When he lost in court, he sold off his HP stock and managed not to lose as much cash as the company did.

    HP tried to manage its way back to profitability by cutting pretty much everything in sight. They cut R&D, which never ends with you regaining a leading position in it. They cut headcount in a way that seemed almost random to outside observers. HP could have gotten its people to accept 20% pay cuts for a year: other companies in the industry were doing that, or requiring more work hours at the same pay. But HP never tried it. There used to be a concept called “The HP Way”, a management philosophy from the original founders that emphasized the brainpower of its employees as the company’s greatest asset. Carly broke that entirely, treating employees as the greatest cost. I do not think they have forgiven her yet.

    Today, Carly is touting “grew the company” and “grew revenues” as hallmarks of her business acumen, never mentioning that she lost half the company’s value and was asked to leave before she could do any more damage. I see nothing to indicate that she has learned from her mistakes, or even that she is capable of doing so. Her reputation at the time was of being focused, driven, impatient with anything short of agreement, and uninterested in compromise of any sort. She fits perfectly with the rest of the Republican field.

  2. Mano Singham says

    Thanks Numenaster! That provided very valuable information to complement Sonnenfeld’s article.

  3. says

    Yeah, when she played that “doubled revenues” move, I reached for my copy of ‘how to lie with statistics’ What a horrible person. Her decision to buy a thin-margin business that was failing and to use that as the “new direction” for HP was dumb and devastating. Worse, it ate up so much capital that all HP could subsist on after that was toner and printer sales. She didn’t hold HP down and hammer a stake into its heart, but her strategic blunders amounted to the same thing. Think what a great job she’d do with a whole country!

  4. Numenaster says

    Even if it made any sense to “run government like a business” (and it doesn’t), the two business people in the race are not ones I would trust to run a convenience store.

  5. smrnda says

    I get very irritated when people born into privilege try to hide it and take some part time job (which they never relied on to pay their own expenses) and portray their life story as if they started out at that lowly position to rise without assistance or the benefits of privilege. I’ve seen that from plenty of rich kids -- the time when they were 15 and washed some cars at one of the dealerships owned by their family is now ‘at 15 I was washing cars, hoping to someday get my big chance’ -- the big chance was who their parents were. They just put in some time pretending to work to gain credibility from the gullible and because it’s sort of a rite of passage.

  6. Reginald Selkirk says

    Marcus Ranum #6: Think what a great job she’d do with a whole country!

    I have been. Fiorina’s strategy at HP was not to make new or better products, it was M&A (mergers and acquisitions). I’ve been thinking we could settle the whole Mexican border issue with a merger. If we buy their country, suddenly it’s not a border any more!

  7. says

    I’ve been thinking we could settle the whole Mexican border issue with a merger. If we buy their country, suddenly it’s not a border any more!

    I have long thought that the most brilliant strategic move the US could make would be to offer Mexico statehood.


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