Computerized Storm Clouds - an MBA Legacy

[tw]

On March 19, HP will decide the future of Compaq and HP. Today, Lew Platt, the previous CEO of HP goes before an investor advisory board in Rockville MD to add to a chorus against an anti-American, MBA thinking HP CEO:
http://www.nytimes.com/2002/03/04/te...gy/04HEWL.html

Carly Fiorina is a Stamford U graduate in medieval History and a successful Lucent salesman. She has no experience where the work gets done. She is a classic MBA who only understands business from her spread sheet training. Therefore she would never understand Warren Buffett who says that only the stockholders of the taken over company prosper in a merger. The merger of Compaq and HP would be a disaster for HP as any 'product oriented' thinker could see.

Walter Hewlett is the only HP BoD member to stand up against this anti-HP MBA. In fact, the entire Hewlett and Packard family object to a merger that only makes short term spread sheets look good (and that enriches top management at the expense of the world).

Well, it got nasty as only an MBA would do. The MBA started slinging mud by calling Walter Hewlett a philanthropist and musician. No mention of his master degrees in Electrical Engineering and advanced physics. Shameful but predictable that an MBA with only a medieval history degree would make such dirty claims.

As a stockholder, I am receiving letters from both sides weekly. Now I am receiving phone calls from both weekly. Although my votes will be trivial, it suggests how close this vote will be. Too many on large mutual funds are MBAs and will not see how destructive another MBA would be to HP. Therefore the votes will be close. Why do they not learn from HP history? Remember John Young?

John Young, an HP CFO took over as CEO when Bill and Dave retired. In four years, he quickly drove HP into the ground by stifling the innovation pipeline. So in classic MBA style, he bought Apollo Computer to enhance the HP computer line. As any product oriented person could tell in advance, it was a disaster. HP floundered so badly that Dave Packard was all but assaulted at Palo Alto beer bashes (from a friend who was there) by frustrated employees. Eventually Dave Packard, old and hurting from his wife's death, had to return to save his company (BTW, Dave of Wendy's also had to do same). John Young is a classic MBA who looked good on paper as he slowly destroyed HP's innovative culture. As soon as John Young was removed, HP began releasing stifled technology such as the Laserjet 4.

After removing the MBA John Young, Dave left the company in Lew Platt's good hands. HP went on to become the dominant printer manufacturer including ink jet printers. Ever buy an HP inkjet lately? It does not have the reliability it once had because, who took over after Lew Platt? The MBA salesman from Lucent.

Now that her big plan to merge Compaq is in trouble, she is disparaging Walter Hewlett. That was when I decided those commercials, where she promoted the word "Innovation" in front of Bill and Dave's famous garage, may be nothing more than a classic MBA talking (lying). I discovered that Carly Fiorina is a classic MBA - with no dirt under her fingernails, and with a cost control, anti-innovation mentality.

I am going to that board meeting expecting to watch a dirty proxy fight. I did not get to see the one where Apple Computer stockholders are rumored to yell four letter words down upon the Board. So violent were those expressions that Apple's BoD held an emergency meeting to remove Michael Spindler. He was given 24 hours to fly from NYC to CA and clean out his desk. Eventually most of those MBA's on Apple's BoD were removed - good riddance.

An MBA with credentials just like Fiorina's, was removed from Apple to save the company. Kudos to Apple's stockholders for abusing Apple's Board of Directors into voting for the company instead of its MBA. After reviewing their background, only one Apple Director had anything close to experience in the computer industry. One lady Director was nothing more than a professional spokesperson. No wonder they thought the MBA Michael Spindler would not bankrupt Apple. They knew nothing about computers and therefore were going to support the MBA Spindler in the destruction of Apple Computer.

Will the HP board meeting be as active? Maybe. I am reminded of another merger that resulted in anti-innovation; the merger of Tandem and DEC into Compaq. Ironic that Compaq is no longer the premier PC manufacturer because they wasted good money on bad mergers. For example, the crown jewel of DEC, the Alpha processor, instead had to be abandoned by Compaq. Where did DEC provide any value? Would HP realize why those Compaq mergers were so destructive? Of course not. HP is currently run by a MBA named Carly Fiorina who now disparages good people like a vindictive housewife.

Watch these next two weeks as we will see what MBAs (like those who ran Enron) will do to get their way - or at least enrich themselves at the expense of America and the world.

One must remember why Bill and Dave were so successful. They would identify a new, innovative technology before it was surrounded by a large company- before the technology could be measured on spread sheets. A new technology and its innovators would be merged into HP as a new division run by those innovators. Therefore HP did not have to disassemble an entire, existing company, and rebuild it into the HP structure. Even moreso, Bill and Dave were innovators. They could see value in an innovation before the spread sheets could report same.

Carly Fiorina can only see value after the innovations are no longer innovative. She can only see what spread sheets tell her. Any product oriented thinker knows those spread sheets summarize work and innvations of four to ten years previous. But Carly is MBA trained and could not understand innovation if we stuck it up her nose. Looking forward to a real WWF type brawl - not faked like on TV. Also will be curious to see how big Carly's nose really is.

[jaguar]

Shall be interesting the outcome indeed, if a compaq/hp merger then went belly-up the result would be catastrophic. Btw i've know for along itme what MBA means, but not what it sands for, anyone care to elighten me.

[elSicomoro]

Originally posted by jaguar
Btw i've know for along itme what MBA means, but not what it sands for, anyone care to elighten me.

Master of Business Administration. I merely have a B.A. (Bachelor of Arts), though I like to think it means badass.

[Griff]

Is that a B.A. in B.S.?

Gee a philanthropist and a musician, that stings.

[elSicomoro]

Originally posted by Griff
Is that a B.A. in B.S.?

Well, psychology, so practically B.S.

[tw]

ISS endorsed a HP Compaq merger after the market closed. They advise about 23% (by shares) of HP's stockholders. But ISS noted that Walter Hewlett's objections were valid.

Just got another call from Fiorina's people again asking for my proxy vote. One HP stockholder with a paltry 2.1 million shares is amused how much attention he is getting for his less than a tenth of one percent of the company. Yesterday's WSJ had a full page ad from Walter Hewlett detailing his objections and reminding HP employees that management cannot know how they voted. The Hewlett and Packard families with about 18% shares opposes this deal.

It is a $25billion merger. Both sides are estimated to have spent over $10million recruiting proxy votes. It is clear that, once friends, whoever loses will now have to leave the company. That even included Conduit of Boeing who is also on the Board. Even HP's old CEO, the person who personally selected Fiorina, objects to her empire deal. The merger of Compaq into HP only enriched Compaq stockholder as Warren Buffett repeatedly noted - and all top managers of both companies. Everyone here, every future computer shopper, becomes a loser if this deal happens.

Is that one stockholder you? Or was that from someone else?

[tw]

Originally posted by dhamsaic
Is that one stockholder you? Or was that from someone else?

My original 100 shares split many times. But a geometric expansion just does not get to 2.1 million shares in a lifetime.

Still being evasive. Don't say whether or not you've bought a whole lot more shares. I'll make it easy: You worth $42 million or not? If so... you're richer than I am

There are a lot of multimillionaires at my company that work around me every day. They keep it up 'cause they need something to do. Don't want to be bored. I'd retire as soon as I hit above like $6M. Interest on that is pretty decent, and it'd be enough that I could live on it for the rest of my life. And I'd spend my free time playing Quake3 and doing other fun things, of course

When'd you invest in HP? How much, percentage wise, have you gained from that investment? If you don't mind me asking, of course. I understand that you maybe don't want to divulge personal financial information. Just that if you own 2.1 million shares of HP, you probably figured that we'd find out how much it was worth. I just happen to know that HP is sitting around $20...

Anyway... I'm placing my bets on SAIC and IBM, as well as some carefully picked mutual funds. I'm only 20, so I've got plenty of time for them to grow. Hopefully my goal of retiring by 40 will become a reality.

P.S. - Fiorina is filthy fucking rich and would get a TON of money for making this deal go through. Does that bother anyone else?

[Undertoad]

tw, you'll love this letter from an ex-HPer so much, that I am not going to just link to it... I'm going to cut and paste the entire thing right here. Sorry folks, this is a long one. But it's brilliant.

--

"If Wall Street Knew What HP Knows"

Everyone in HP seems to know it. Management knows it. The rank and file knows it. Carly Fiorina's staff seems to know it. It's the best kept secret outside of HP and the worst kept secret inside of HP. It's not proprietary information, so here it is: Fiorina has lost the people
of HP. She is reviled, despised, and unwelcome in the company. The vast majority of HP people wouldn't follow her to a new restaurant, much less through a gut wrenching merger.

How bad is it? Fiorina goes to HP divisions to talk up the merger. Instead of going through the front door and mingling with employees, her staff -- citing security concerns -- slips her in through a side door. She gives her stump speech and then she is whisked out again. In a December visit to the large Vancouver division, she was so paranoid about the rank and file that her security people had all the china cups and metal silverware replaced with styrofoam and plastic. Chairs were strapped together with cable ties. When this happens on an airplane, it's sad. When it happens at an American corporation, it's a joke. When it happens at Hewlett-Packard -- a company known for friendly relations between management and employees -- it's pathetic.

How bad is it? Fiorina's quarterly announcements are regularly ignored. Anything she says is considered suspect. Many HP employees speak of opposing the Compaq deal in large part to vote against Carly. This adds a different spin when Fiorina claims to "know the people of the new HP."

Lest anyone think this is due to the proposed merger or the sour economy, it is not. This is a direct response to the policies Fiorina has pursued since her arrival. She has squandered all the good will she was afforded on her arrival. She has turned believers into cynics; optimists into pessimists. Fiorina has been very vocal about what the HP Way is not, but she has been relatively quiet about what the HP Way is. Let me share the best definition I have heard. The HP Way is based on an assumption: "I assume that you want to do a good job and will do so given the right tools and environment." CEOs make this assumption about staff. Staff makes this assumption about management.

Unreasonable? Hardly. Silicon Valley culture is based on this assumption. Outdated? Never. Yet from her arrival, Fiorina's policies have violated this basic assumption. In her statements and actions, she let it be known that she considered much of the HP staff to be slackers who had to shape up or get kicked out. This is why her layoffs have elicited a much stronger reaction than the 20% layoffs experienced by the HP spinoff, Agilent Technologies.

The problem with Carly Fiorina is that as a medievalist she talks like Henry V, but thinks like Marie Antoinette. At the same time that she was cutting travel funding for staff and eliminating staff use of corporate jets, she was purchasing three Gulfstream jets for HP executives -- the largest for her exclusive use. She clearly can't stand HP culture. From her garage ads featuring a fake shell resembling the original Addison Street garage to her hollow promises to return HP to its inventive roots, Fiorina has shown her leadership to be a sham, a facade -- and the vast majority of HP people despise her for it.

Don't be fooled by articles saying that HP people are split on the deal. Talk with people inside HP and you will find that the sentiment is almost entirely against the deal. Upper level managers are ordered not to speak against the deal. Employees are told not to speak in public about it -- with one exception: Fiorina's staff has scoured the company to find people willing to speak in favor of the deal. Fliers have gone up in divisions asking for volunteers willing to speak on camera for TV ads. If you want to understand how open this process is, just note that
it is only the people speaking in favor of the deal who allow their names to be used. Those speaking in opposition to the deal keep their anonymity in fear for their jobs.

What this means for people who hold HP stock is that the merger -- if attempted -- is almost certainly doomed to failure. Fiorina's inability to lead HP guarantees that.

Here's a win-win scenario. Fiorina leaves HP and becomes CEO of Compaq. This gives Fiorina a corporate culture she likes. Michael Capellas gets a chance to work for Fiorina. And it gives the people of HP -- make that Hewlett-Packard -- a chance to get a leader that they can
respect.

Danny Abramovitch
Palo Alto, CA
2/17/02

[russotto]

I hate to agree with tw but IMO this deal sucks.

[Scopulus Argentarius]

I agree with tw that the merger is the worst possible thing for both companies. I've talked to a couple of hp employees who have nothing but disdain for CF. She's bleeding the company dry of talent, money, and market share.

[tw]

I just got out of the HP merger meeting. Carly Fiorina took only 17 questions. Question 15 apparently unruffled her. In response to an HP long time Network Integraton employee with 8 patents, she claimed that most HP employees were in favor of the merger. The response was loud Nos and Nays. She repeated her assertion and was confronted by so much noise that is was not possible for her to be correct. I believe that response so unnerved her that she terminated all questions and adjurned the meeting. During Question 16, she was clearly distracted.

Voting results will probably take 3 weeks because of how confused the voting procedures are. One could keep submitting proxy votes so that only his last dated vote made any sense. They will require much verification of the results.

Walter Hewlett got a 20 second, loud, standing ovation both when he stepped up to and stepped away from the microphone. When another said he would vote in favor of the merger, it was clear that less than 5% applauded his comment. Clearly 80+% of the meeting participants were against the HP/Compaq merger. Does Castro even see that kind of one sided voting?

Unfortunately, in eavesdropping on conversations, many suits were heard to vote for the merger. Most stockholders didn't wear ties. But I suspect that the suits may have been the pension funds.

This is your reporter, tw, in the fields of Sunnyvale (where we had snow and rain). Back to you.....

[tw]

This was rumored to be on rec.humor.funny ...

In article <S11fc.59c3@netfunny.com>,
King Ables <king.ables@alumni.utexas.net> wrote:
> With apologies to Don McLean...
>
> A long, long time ago
> I can still remember how computing
> used to be worthwhile.
>
> And I knew from the day I was born
> that I could make that code perform
> and maybe I could do it with some style.
>
> But last September made me shudder,
> with every 'nouncement Carly uttered.
>
> Bad news in my In-tray,
> I couldn't take one more day.
>
> I can't remember if I sighed when I
> read about our latest stride,
> something cut me deep inside,
> the day the HPWay died.
>
> So
>
> <Chorus>
>
> Purge, purge, Ms. Technology Scourge,
> Drove my Beetle to the Needle,
> Now my job's on the verge.
>
> Them Compaq boys were
> drinking Starbuck's and Surge
> singing "This'll be the day that we merge,
> This'll be the day that we merge."
>
>
> Did you write the Book of DOS
> And do you believe an albatross
> Can really save our company?
> Now do you believe in buying time?
> Can Compaq save our bottom line?
> And can you teach me how write a resume?
>
> Well, I know you hatched that plot with him
> 'Cause I saw you climb out on that limb.
> You both threw down your stock
> 'Cause you thought this deal was a lock.
>
> I was a middle-aged computer geek
> With a second mortgage that I closed last week
> But I knew Sun was worth a peek
> The day the HPWay died.
>
> I started singing
>
> <Chorus>
>
> Now for some time we've been on our own
> Since Bill and Dave left us alone
> But it's not how it used to be.
> When the managers still walked around
> And talked to people who touched the ground
> They could hear ideas from you and me.
>
> But now when the Queen is looking down
> The worker bees just fly around
> The boardroom is reserved
> No progress is observed.
> And while Carly read a book on Dell
> The stock price slowly went to hell
> And we tried so hard not to sell
> The day the HPWay died.
>
> We were singing
>
> <Chorus>
>
> Arbitrage, arbitrage in the garage
> Employees fleeing from the barrage
> Of all the spin on HPNow.
> Green cards, white cards flying around,
> Shareholders want good reasons found
> With employees on the sidelines tied and bound.
>
> Now the meeting air was full of gloom
> While the board played their tired old tune.
> We all got up to vote
> Oh, but they said we rocked the boat.
> Then when Walter tried to make his speech,
> Carly told him to "just go teach"
> Do the by-laws allow impeach?
> The day the HPWay died.
>
> <Chorus>
>
> They say we were in a shipwreck
> A generation mired in Tech
> Lethargic and pedestrian.
> So come on everybody let's just grow
> We'll be as big as IBM you know
> 'Cause size is the CEO's great plan.
>
> Oh, and as they watched her on the stage,
> They all began to see a sage
> Everyone in The Flint
> Was finally taking the hint.
> And as the white cards flew into her sight
> The crowd could finally "see the light"
> I saw Carly smiling with delight
> The day the HPWay died.
>
> I was singing
>
> <Chorus>
>
> I met a girl who looked amused
> And I asked her what PC she used
> She just smiled and said "Gateway."
> I went down to the comp'ny store
> Where I'd bought HP shirts years before
> But the man there said he's out of "HP Way."
>
> And in our cubes we reminisced
> Of ways of business that were dissed
> But not a word was spoken
> All of our hearts were broken.
> And the two men I admired best
> Bill and Dave were not at rest
> The new guys did not pass the test
> The day the HPWay died.
>
> <Chorus>
>

[tw]

Voting has been reported by the counting firm (IVX of Delaware?). The merger was approved by about 2.8%. Even if Deutche Bank's 17 million shares were manipulated illegally, the voting difference was 45 million. However the count will not be certified until after an SEC investigation is completed. Even if those Bank shares are declared invalid, the HP/Compaq merger is a done deal.

Remove all Hewlett and Packard family shares from the voting, and the big funds voted for the merger by a factor of two to one. It demonstrates how differently the finance types view what makes a company productive - especially when HP employees - the people who come from where the work gets done - were against the merger by about 4 to 1.

Now for a real question - how long will HP slowly downsize, like Apple under Sculley and Spindler, before HP BoDs throw out the problem - Fiorina. I expect this to be a long, slow, diminishing of HP.

Sidenote - in the stockholder meeting, the counting firm noted that all votes would be locked in a secure container and taken to a secret location for counting. People laughed. The IVX representative then noted that some shareholder votings (probably in another company) were previously corrupted when someone stole the votes while they were in transit. As he said, "It has happened".