Walter Hewlett, who three years ago was tossed off Hewlett-Packard's board for fighting the purchase of Compaq Computer, may have been right...
Walter Hewlett, who three years ago was tossed off Hewlett-Packard’s board for fighting the purchase of Compaq Computer, may have been right in the end.
Former Chief Executive Carly Fiorina derided Hewlett as a “musician and an academic” during his proxy fight to stop her plans to buy Compaq. Fiorina lost her job after failing to deliver the profit improvement she promised and presiding over a 50 percent drop in the company’s share price.
“Good execution is what HP needed, but Carly wasn’t able to do that,” Hewlett said yesterday in an interview from Palo Alto, Calif.
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“She found a big splashy move like a merger to distract people from the fact that she wasn’t really able to get the job done.”
Hewlett, son of the company’s co-founder, called the contest over the $18.9 billion Compaq purchase in 2002 a “debate about the soul of HP.”
He was thrown off the board after suing the company and saying Hewlett-Packard was trying to fight too many competitors at once.
Competing with Dell for sales in personal computers would mean cutting prices and sacrificing profit, and chasing large corporate accounts against International Business Machines would mean putting more focus on services such as running computer networks. Hewlett argued HP couldn’t pursue those two strategies simultaneously.
Fiorina personalized the fight, telling analysts at a New York meeting in 2002: “Don’t be distracted by the so-called focus-and-execute plan” that Walter Hewlett proposed. “It is not a plan; it is a press release.”
In his campaign against the purchase, Hewlett released confidential documents in showing directors considered paying Fiorina and Compaq Chairman and CEO Michael Capellas more than $115 million in the two years after the deal.
The HP board ousted Hewlett after he sued the company, claiming executives coerced shareholder Deutsche Bank to switch as many as 17 million votes to favor the Compaq deal.
He had been a director for 15 years and was the only heir of the founding families left on the board.
Many workers called Hewlett a hero for fighting. When he took the podium at the March 2002 shareholder meeting, the audience cheered. They booed Fiorina when she said employees supported her purchase. Asked to hold off on firings for two years, Fiorina said no.
“I’m optimistic about Hewlett-Packard,” Hewlett said yesterday. “The hand that HP has now is a strong hand, and something can be made of it.”