Carly Fiorina was ready when CNN’s Jake Tapper asked her to respond to criticism about her record at Hewlett-Packard during last week’s Republican debate.
Looking intently into the camera, Fiorina said that a prominent venture capitalist who pushed for her firing at Hewlett-Packard in 2005 had recently taken out a full-page newspaper ad saying that he had been wrong to do so and that she had been “a terrific CEO.”
What Fiorina didn’t mention was that the ad – which cost roughly $140,000 – was paid for by the “super PAC” supporting her presidential candidacy. The same group, Carly for America, has gathered video footage of the venture capitalist, Thomas J. Perkins, praising Fiorina, and it could be used in television or Internet ads in the weeks ahead.
The face of corporate greed
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The moves are part of an extensive effort by Fiorina and her supporters to redefine her rocky business reputation and fend off attacks on her as an unfit and heartless executive. Such accusations helped doom her 2010 Senate campaign in California. Democrats called her “Carly Fail-orina” and the incumbent Sen. Barbara Boxer depicted her as the face of corporate greed.
But Fiorina’s mission to reshape her business image is colliding with a painful new chapter for the computer maker: Hewlett-Packard announced last week that it would slash as many as 30,000 jobs as part of a restructuring that will divide the tech behemoth into two publicly traded companies, which Fiorina’s detractors view as a repudiation of her legacy.
Fiorina drew effusive praise for her performance in the debate, and she’s attracting enthusiastic crowds on the trail. But the growing attention will bring more scrutiny to her record amid a resurgence of economic populism and uneasiness over income inequality in both parties.
Fiorina drew effusive praise for her performance in the debate, and she is attracting enthusiastic crowds on the trail. But the growing attention will bring more scrutiny to her record amid a resurgence of economic populism and uneasiness over income inequality in both parties.
Still adamant that she was a successful chief executive, Fiorina is acutely aware of the vulnerabilities her past presents in this race. But she also risks becoming bogged down in a defense of her record at the expense of her message as a political outsider who would bring conservative change to Washington – a message that has resonated with voters in recent weeks.
Similarities to Romney
In 2012, Mitt Romney, the Republican nominee for president, was attacked by Democrats blaming him for layoffs at companies controlled by Bain Capital, the firm at which he made his fortune. The barrage helped convince voters that Romney lacked an understanding of ordinary people’s problems.
And unlike Fiorina, whose entire résumé has come from the private sector, Romney spent four years as governor of Massachusetts.
Martin Wilson, who managed Fiorina’s 2010 race, acknowledged in an interview that the campaign failed to adequately address voters’ concerns about her corporate record.
“But if you spend the whole campaign trying to defend choices she made,” he added, “then you’re not talking about your issues or an agenda.”
Rising to the top
At every step of her career, Fiorina has thrived on being an outsider. As a young executive at AT&T, she discovered a talent for sales in an often coarse and sexist culture. In 1999, after helping to take Lucent Technologies public, Fiorina was named chief executive of Hewlett-Packard, making her the first woman to lead a Fortune 20 company.
But her knack for self-elevation brought grumbling within the Palo Alto, California, pioneer’s corporate ranks.
“Carly is not an engineer,” Perkins said in an interview. “The older people at HP never endorsed her and were unhelpful. Marketing and sales loved her – she’d go anywhere, she’d close deals.”
The centerpiece of those deals was the company’s $24.2 billion merger with Compaq Computer, which divided the HP board and greatly increased the workforce, size and breadth of the company’s products.
The deal was so personal to Fiorina that she referred to HP as “Héloise” and Compaq as “Abélard,” a pair whose romantic letters became treasures of medieval French literature, which she studied at Stanford. (Abélard was eventually castrated after fights with Héloise’s family, a detail Compaq executives were unaware of at the time.)
But the merger, which was announced just before the Sept. 11, 2001, terrorist attacks and amid the dot-com downturn, also led to painful consolidation, cost cutting and layoffs that later haunted Fiorina’s Senate race.
In November, HP will shed 10 percent of its workforce and split into two companies, one devoted to corporate information technology, including cloud computing, the other focused on printers and personal computers.
Evaluating her impact
While some analysts say the Compaq merger saved the company and HP’s planned split has to do with years of bad decisions involving a series of chief executives, others say the latest saga began with Fiorina’s grand acquisitions, which never yielded the profits or economies of scale she and her successors anticipated.
“She had a very mixed tenure. The culture she tried to change spit her out, eventually. I’d put her at the top of the bottom third of CEOs.
chief executive of Forrester
“She had a very mixed tenure,” said George Colony, chief executive of Forrester, a technology research firm. “The culture she tried to change spit her out, eventually. I’d put her at the top of the bottom third of CEOs.”
Fiorina defends her tenure, armed with statistics that sounded like a PowerPoint presentation. The support of Perkins, a former HP board member and founder of one of Silicon Valley’s biggest venture capital firms, could prove critical in making her argument stick.
“We doubled the size of the company,” Fiorina said in last week’s debate. “We quadrupled its top-line growth rate. We quadrupled its cash flow. We tripled its rate of innovation.”
But much of that growth resulted from the Compaq acquisition. Profits as a percentage of revenue in the six years Fiorina served as chief executive declined about 40 percent. The stock price fell sharply. Fiorina blames the burst of the dot-com bubble for the drop, but HP shares fell by more than the stocks of competitors like Dell, IBM, Intel and Microsoft.
How she lost to Boxer
Fiorina’s political rivals have also highlighted that she ushered in a period of corporate scandal, including public clashes with members of the Hewlett family. Fired in 2005, she left with more than $42 million in severance, stock options and pension.
Fiorina seemed poised to offer Boxer a vigorous challenge in 2010. Democrats were under siege in the midterm elections, and Fiorina was an engaging outsider who spoke eloquently about her rise from secretary to CEO and about surviving breast cancer.
“We were very concerned about Carly Fiorina when she first got into this race,” said Rose Kapolczynski, a veteran Democratic operative and the longtime campaign manager for Boxer. “She is a very compelling personality, she’s a terrific performer on the political stage.”
But after Fiorina emerged from a relatively smooth primary (with the exception of a bizarre ad that portrayed her opponent as a demonic sheep), the Boxer campaign unleashed attacks on her HP record. The barrage came against the backdrop of the state’s more than 12 percent unemployment rate.
In one ad, called “Outsourced,” footage showed Fiorina defending sending jobs overseas. “When you’re talking about massive layoffs, which we did, perhaps the work needs to be done somewhere else,” she said.
In another, called “Workers,” former HP employees spoke solemnly into the camera. “I had to pack my bags, and I was out the door that night,” said Larry, who worked at HP for 10 years. Another victim of the layoffs, Teri, said, “We even had to train our replacements.” (Fiorina has said she saved 80,000 positions.)
Jim Margolis, the ad maker for the Boxer campaign, is now a senior media adviser to Hillary Rodham Clinton.
People don’t know her yet. What they’ll understand pretty quickly is that she is the face of income inequality and Wall Street greed.”
“People don’t know her yet,” Boxer said in an interview before last week’s debate. “What they’ll understand pretty quickly is that she is the face of income inequality and Wall Street greed.”
Wilson, the manager of Fiorina’s Senate campaign, said that while the attacks proved effective in the general election in the solidly blue California, they “didn’t have any legs at all among GOP primary voters.”
In an interview last month, Fiorina said she had made enemies at HP by challenging the status quo, and she pointed to other ousted chief executives, including Steve Jobs. “Of course there’s going to be scrutiny on my business record, and there should be,” Fiorina said.
She encouraged a reporter to examine HP’s quarterly results.
“The data about my time at HP is crystal clear,” she said. “Imagine if politicians were held to the same standard of accountability.”