IP: Editorial on HP ...

[Dave Farber <dave () farber net>]

To: Dave Farber <farber () cis upenn edu>

Dave,

Please identify me only as a former HPer as you did on the first one.
I believe that this is ready to go (everything below the line of =s).

-- 

======================================================================

"Image versus Reality"

I have a friend, a pioneer in the computer world, and a former HP
employee such as myself.  A couple of years ago, I asked them what
they thought of Carly Fiorina.  Their response was, "She says all the
right things."  A few months ago I repeated the question.  Again came
the answer, "She says all the right things."  Two years ago, I
thought it was a comforting statement.  Now, I'm not so sure.

Saying all the right things is a great place to start.  Where it runs
into trouble is when there is a complete disconnect between what is
said and what is done -- between image and reality.  After all, Joe
Isuzu says all the right things.  It's his credibility that causes the
problem.

Sadly, saying the right things -- or image creation -- has been the
main positive aspect of Fiorina's leadership of HP.  If Fiorina had
followed through on those right things, it's very likely she would be
an extremely popular head of HP and there would be little or no
opposition to her leadership.  Give us some examples you say?  Well,
here we go.

Fiorina's initial promise as CEO of HP was to return HP to its
inventive self.  In beautiful TV commercials that started running the
week of December 1, 1999 her voice told us:

    "Inventors are not interested in politics or bureaucracy.  Those
    are ridiculous in a garage.  And if for one moment the company
    these two men founded ever forgot the rules of that garage, we
    won't forget them now.  Because the company of Bill Hewlett and
    Dave Packard is being reinvented."

To drive home the point, she commissioned "The Rules of the Garage,"
rules that essentially restated the HP Way.  For the TV and print ads,
as well as the posters that showed up around HP, a replica garage was
conjured up to resemble the original HP garage.  She had the HP logo
changed to emphasize the word invent.  On the surface, things seemed
to be looking up.

However, the fake garage -- the once again symbol of HP -- was merely
a shell.  A friend of mine from HP entered the one outside HP
headquarters.  The outside looked rustic -- the inside was the
cheapest high tech shell imaginable.  It was a facade for advertising,
so fake that Sun Microsystems has made a wickedly funny parody of
Fiorina's garage ads that has leaked into the outside world.  The fake
garage would not have been a big deal had the rules not been as much
of a facade.

    "Rule 5: No politics." During Fiorina's reign, HP has become
    incredibly political.  Just take a look at the attack campaign run
    against Walter Hewlett both inside and outside the company.  James
    Carville would blush at this stuff.

    "Rule 4: Share -- tools, ideas.  Trust your colleagues." Under
    Fiorina, HP has become a closed place where people don't know who
    they can trust. Open debate has been squelched.  The individual
    who has demonstrated the least trust in their colleagues is
    Fiorina herself, replacing the open door policy of her
    predecessors with armed body guards.  Her trust in her colleagues
    was demonstrated in December when prior to her giving a talk in
    the Vancouver division cafeteria, china cups and metal silverware
    were replaced with styrofoam and plastic.  Chairs were cable tied
    together.  So much for trust.

    "Rule 11: Invent."  Ah, the last rule.  The bottom of the new HP
    logo.  The centerpiece of many of HP's pro-merger ads.  To bolster
    the claim that HP has improved during Fiorina's tenure, that
    inventiveness is alive and well (EE Times, 1/7/02; Business Week
    Online, 12/24/01) HP's top brass points to an increase in patent
    filings: up between 67 and 100 percent, depending upon who is
    making the claim.  How did this happen?  Very simple.  HP gutted
    the internal patent review process.  In early 2000 management was
    given a new directive, to raise the number of patent filings
    substantially.  It turns out that HP's ranking was no where near
    that of other tech firms including IBM, and the spin off of
    Agilent would only make it worse.  To raise the numbers, employees
    were encouraged to file just about any idea and let the US Patent
    Office decide the matter.  The net result is more patent filings,
    but it proves little about HP's inventiveness.

Still not enough?  Well let's look at some more recent Fiorina
contradictions.  A flier mailed to shareholders with many of the white
proxies has an investor briefing Fiorina gave at a Goldman Sachs
Technology Conference (2/4/02).  Talk about saying the right things.
In it Fiorina claims, "Today, all of the printers we make are
Web-enabled, capable of connecting directly to the Internet so that a
printer can access digital content from any device, anywhere."
However, a quick look at HP's printer offering on their web page
(www.hp.com) reveals that this statement is patently false.  HP still
sells many dumb printers which can only connect to the Internet via a
computer.

[ As a Mac owner let me assure you the above is true as it has been for many
other HP printers even on PCs Dave F]

Fiorina talks about 15,000 layoffs in the combined company due to
"synergies" with Compaq (i.e. overlap).  Yet in that same flier, she
tries to entice analysts with:

    "We have built a conservative case for synergies.  We have
    estimated cost synergies of $2.5 billion by 2004, but frankly our
    initial numbers were substantially higher, and the business plans
    we're currently building in our final phase of integration
    planning are higher as well."

Higher synergies means more layoffs -- "substantially higher" by
Fiorina's own words.  Once again we have a contradiction between her
claim of 15,000 layoffs once the transaction is completed and her
"final phase" "business plans."

The HP board members who support the merger send us letters saying
that the Compaq deal is the result of 2 1/2 years of careful planning.
Now, I'm no board member, but I still can't figure out how an abortive
attempt to buy PricewaterhouseCoopers fits into that careful planning.
"Okay, we really want to buy Compaq.  So what we're going to do is
negotiate for PricewaterhouseCooper, get close to closing the deal,
and have it fall apart.  Then and only then, Compaq is ours!" Right.

Finally, we come to the HP Way. In a clear marketing coup, Fiorina's
pro-merger web site is at www.votethehpway.com, a clear attempt to
imply that supporting the HP Way means supporting her.  In a recent
interview in the San Jose Mercury News (2/28/02), she claims to love
HP.  Yet when asked about corporate cultures, she is quick to say that
there is a lot that HP can learn from Compaq.  How come we never hear
the other part? It seems that someone who admired HP would also think
that there is a lot that Compaq can learn from HP.  The silence is
deafening.

Why does all this matter?  Because how you vote on the deal pretty
much depends on who you trust.  For that, you have to compare what
they say to what they do.  Back in the 1980s television show, "Sledge
Hammer", the incompetent detective played by David Rasche would gaze
at the audience with his blonde hair and blue eyes and say, "Trust
me.  I know what I'm doing."  Those familiar with his track record
would know to expect a comedic disaster.  Now, Fiorina looks us dead
in the eye and says, "Trust me.  I know what I'm doing."  Looking at
the track record of following through, we know what is going to
happen. Only it's not funny anymore.


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