Q&A: Fiorina: The Deal Is "The Right Thing for Shareholders"

On Saturday, Dec. 8, Hewlett-Packard's (HWP ) Carly Fiorina sat down with BusinessWeek Department Editor Peter Burrows and Senior Editor Kathy Rebello to discuss her effort to merge with Compaq, opposition to the deal, and her tenure at one of the most storied companies in Silicon Valley.

Q: Were you surprised by the decision of the David & Lucile Packard Foundation to oppose the Compaq (CPQ ) deal?

A: Not really. I think the foundation has very particular interests. They are focused, as a foundation, on wealth preservation. And we as a company, and I as the CEO, have to be focused on value creation and industry leadership. In this case, those are divergent objectives from each other.

Q: What do you have to do now to get the deal done?

A: We keep going. It's the right thing for shareholders. We think it's the right thing for the company. And the foundation's decision doesn't change that. We've done the numbers with and without the Packard vote.

Q: At this point, many shareholders we've talked with are negative on the deal. What will you do to overcome that?

A: We've got a long way to go on this vote. We haven't filed a proxy yet. We don't have regulatory approval yet. We have at least another quarter's worth of results from both companies. It ain't over till it's over.

Q: It has got to be very upsetting. But you are very calm. Can you talk to us about how you feel?

A: You know, the Packard Foundation decision is much less upsetting to me than some of the unfair characterizations of this company--the lack of fact-based analysis around the progress this company is making, the bias that some people have. That is much more upsetting to me than a foundation making a decision, which I believe was difficult for them.

Q: What are the top accomplishments of your tenure as HP's CEO?

A: I think we are much more customer-focused. Importantly, customers think that. We are generating intellectual property at a much more rapid rate. So, for example, in the year 2001, we filed 3,000 patents, double the rate of the year 2000. Our imaging and printing business remains king of the hill. We've grown our professional-services business pretty substantially. Our product lines are better than they've ever been. We just tied Sun [Microsystems Inc.] for No. 1 in Unix market share.

I think we have a clear view of our strategic direction and our competitive differentiation. And I'm also proud of the fact that this company has remained profitable through what has been called one of the most dramatic tech downturns in 40 years. That's not easy to do.

Q: Why do you think Walter Hewlett opposed the deal after voting with the board in favor of it?

A: I don't know. There is a big difference between an individual managing his own personal assets and the assets of the foundation and a board member going out and actively soliciting against a board's decision. And I don't know how to explain Walter's behavior.

Q: Are you saying you did not know he would go public with his opposition?

A: Walter's behavior publicly has been a complete surprise. And I think it is an insult to this board.

Q: Conventional wisdom seems to be that you might not remain at HP if this deal doesn't happen. Can you comment?

A: It is virtually unprecedented for a deal to go to shareowner vote and be voted down. And I think if that were to happen, the board's and management's credibility would be severely impacted.

Q: The board as well?

A: Absolutely. I do not have a bunch of patsies who sit on that board. They're strong-willed people with minds of their own. I neither could, nor would I, talk the board into something they didn't want to do. This board and this management team are aligned around what we think we need to do.

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