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'Fixing' HP With Strong Operations Strategy

Hewlett-Packard's interim leadership says HP had the right technology strategy but the wrong person to execute it, which is why CEO Carly Fiorina's tenure came to an abrupt end last week. Yet Fiorina's successor is sure to face hard choices about whether the Silicon Valley icon's plan to compete across such a broad range of technologies and services makes sense.

HP CEO Fiorina was ousted last week after failing to successfully execute the company's strategy, outsiders say.

HP CEO Fiorina was ousted last week after failing to successfully execute the company's strategy, outsiders say.

Photo by Beth Perkins

Although some critics believe Fiorina erred colossally in acquiring Compaq in 2002, most say that's not what led to her ouster. Rather, the consensus is that Fiorina couldn't effectively manage the combined companies. "She didn't deliver," says Ashok Kumar, an analyst at Raymond James.

Some customers agree. Jesus Capó, CIO at retailer El Dorado Furniture, which operates nine stores in Florida, says HP slipped. Capó was a satisfied HP server customer, but he's switching to IBM as the company consolidates systems. The decision had little to do with technology, he says.

"I was an HP customer, but I rarely heard from them; they took me for granted," Capó says. By contrast, he says, IBM sales staffers "were constantly calling on me, and I got the sense they really wanted to partner with me. We are a $150 million company and IBM treated us like we were a $1 billion company." Capó will spend more than $100,000 this year on an IBM Unix server and related network and storage systems.

HP's board believes the problems can be fixed and that a breakup of the company isn't necessary. Robert Wayman, HP's CFO, who was named interim CEO, and Patricia Dunn, an HP director since 1998 who was named nonexecutive chairman, insisted last week that a major restructuring isn't in the cards and the company will stick to the broad-based technology strategy it's been pursuing. "What needs to be done is achieving the opportunities present in a remarkable collection of businesses and assets that make up the HP portfolio," Dunn said during a conference call.

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