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Hewlett-Packard ousts CEO Carly Fiorina
Updated: 2005-02-10 11:36

Hewlett-Packard Co.on Wednesday ousted Chairman and Chief Executive Carly Fiorina, the architect of a controversial $19 billion merger with Compaq Computer that never produced the results she promised.

Carly Fiorina [Reuters/file]
Chief Financial Officer Robert Wayman, who was named as interim chief executive, said HP did not plan to split the company up, but that the board would not be "closed-minded" on strategy changes once it locates a new CEO.

Fiorina, considered one of America's most powerful business women, drew effusive praise and criticism during her more than five-year tenure at HP, but the company turned in erratic financial results under her, and the board said its chief concern was to improve "execution" of strategy.

Many on Wall Street hope HP will spin off its printing division, which delivers most of its profit, and HP shares, which have lost 63 percent of their value since Fiorina became CEO in July 1999, rose as much as 10 percent on Wednesday and closed up nearly 7 percent, as chances of a split rose.

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's link to the merger was seen as a problem by some.

Fiorina, 50, HP's first outside leader, took over in 1999 with a mandate to revitalize Silicon Valley's original start-up, founded in 1938. HP had become known for an insular and balkanized corporate culture celebrated internally as "The HP Way."

But the record under Fiorina remained spotty, with HP dashing investor hopes in three of the last nine quarters as it lost market share to rivals Dell and IBM.

Fiorina, the only female CEO of a component of the Dow Jones industrial average, resigned after a showdown on Tuesday afternoon, ending a tumultuous five-and-a-half-year reign. She will leave with a $21 million severance package.

Her ouster came after "weeks and more" of meetings in which directors took issue with her inconsistent track record of executing on HP's strategy, board members said.

Wayman, a 36-year veteran of the company, also was appointed to the HP board of directors. He said a search for a new CEO was underway and that the board had agreed to stick with the strategy combining its printer, corporate computer and personal computer businesses.

"We are looking for a CEO who also embraces that strategy, in all probability," Wayman said in a conference call with Wall Street analysts. But he told reporters later, "The board is saying they are not closed-minded about the strategy."

Fiorina said in a statement, "While I regret the board and I have differences about how to execute HP's strategy, I respect their decision. HP is a great company and I wish all the people of HP much success in the future."

Patricia Dunn, vice chairman of Barclays Global Investors and a member of HP's board since 1998, was named non-executive chairman of the board.


Fiorina had become a lightning rod for criticism from investors and some in the Silicon Valley establishment for pushing through the 2002 merger with rival PC maker Compaq.

She took on the founding families who opposed the deal, beating family scion Walter Hewlett in a proxy contest decided the morning of the vote.

The verdict on her tenure from other executives was mixed.

Patricia Russo, chairman and CEO of Lucent Technologies Inc., a former Fiorina colleague who is also a top-ranked woman executive, was sympathetic.

"Being a CEO is a tough job," said Russo, who worked as a senior executive with Fiorina at Lucent.

But Larry Ellison, CEO of Oracle Corp., the world's second biggest software maker, said he believed that HP's move last month to merge its lackluster PC unit with its profitable printer business may have been the last straw.

"It was a terrible organizational decision that would make it impossible to measure the success of the PC division," Ellison told an investor conference in Santa Monica, California. Ellison has known Fiorina since her Lucent days.

Fueled by enthusiasm at the prospect that the company would once again consider splitting up, shares of HP closed up 6.9 percent at $21.53 on the New York Stock Exchange after rising as much as 10 percent to $22.20 earlier in the session.

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