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Tuesday, November 30, 2004Carly Fiorina's Rough Ride - Part IIWall Street Journal has published an interesting interview with Carly Fiorina .Carly talks about job cuts,Compaq, profit misses and tech's hard new reality. In Part 1, we covered Carly's views about the curent status of tech industry,and HP's approach in fostering growth. In this second and concluding part, we shall cover her views about problems being faced by HP, her approach towards management and HP's acquisition startegy. Excerpts ( with edits and my comments added):On Why hasn't H-P been able to execute consistently? -" I've been pretty candid about the issues in our third quarter [when H-P missed financial forecasts, and fired three executives]. We had a set of systems migration issues [converting to software from SAP AG and other companies] in the U.S. Why did we think we could execute that one? Because we had executed 35 others just like that [in other countries]. We did 35 out of 35, and had issues with the 36th. We also had a set of issues over how to manage our indirect business [through resellers] in Europe, and some longer-standing issues about the number of sales specialists in the field around certain products. All of those issues came together in the third quarter, and came together when the economy had a little stutter step".[Over the last few years] we've missed two quarters in nine. I would rather be saying we hit nine out of nine, but it's important to keep it in perspective. The reality is, we have executed the integration better than most people thought it could be done. On diverse product portfolio - I believe that every piece of the portfolio has to be competitive and healthy in its own right. We don't have this portfolio together to subsidize weak businesses with strong businesses. That's why we've said our PC business has to be competitive and profitable in its own right. [The unit currently is profitable.] [With a large portfolio] we have much more opportunity for leverage. When we sell a naked [computer] box, our gross [profit] margin is far lower than when we sell a solution with software, hardware and services. We're providing more value to a customer, so we can drive more profit to the bottom line.Some people ask why we are both a consumer company and business-to-business company. I find that an interesting question because a lot of successful companies play in both -- in the banking industry, for instance -- and GE plays in both.If a business isn't healthy and competitive in its own right, you're not helping the value proposition. But we think we can get all parts of the portfolio profitable, and we're on a good path to do that. On H-P not buying the consulting arm of PricewaterhouseCoopers before IBM bought it in 2002 - I don't regret my decision around PWC, and I actually made it eight times. I could have bought PWC at multiple price points between $18 billion and $3 billion. I had a meeting right in this office two weeks before IBM bought PWC for $3.5 billion, and I could've had them for $3 billion. I didn't make that decision because I believe the consulting industry broadly has a lot of transformation and consolidation left to do. It's a people business, and the reality is there are too many high-priced people in the wrong places. Customers don't want long projects with high-priced people.Our strategy is to narrow the focus of our consulting and integration business to those places where we have real expertise and intellectual property, so we can provide real value and make real money. We have deep expertise in the telecom industry and the manufacturing industry, for example, and we will partner with companies that we think complement our skills and capabilities. On big layoffs coming at H-P - What we're doing now on an ongoing basis is making sure that we have the right number of people in the right places. So we're adding some people and taking some out of other places. The time of integration when we were taking out gobs of people -- that isn't how we need to do it anymore and it isn't how we're going to do it anymore. About rumours that she is joining the republican party - "It's amazing to me in this information age that rumors still travel faster than fact. I was on Fox the other day and they threw up one I'd never heard before. They said, "We hear you're going to Disney." That was a new one! And no, I'm not doing that either". Interesting - at the end of it, i am still not clear what HP counts for in the industry!! | |
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