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Posted: January 01, 2012

Cote’s Colorado: HP-Compaq merger remains Carly Fiorina’s legacy

Former CEO on tap to deliver keynote at March corporate growth conference

Mike Cote

Carly Fiorina defines true grit and risk-taking. The former chief executive of Hewlett-Packard has the distinction of being the first woman to run a Fortune 20 company. While at HP, Fiorina presided over the company's $24 billion takeover of Compaq, a deal she publicly defended last August as HP considered spinning off its PC business.

Since being forced out by HP's board in 2005, Fiorina wrote the memoir "Tough Choices," ran as a Republican for U.S. Senate in California, and formed a consulting business, a foundation and an education outreach program.

Fiorina will deliver the keynote address at ACG-Denver's Rocky Mountain Corporate Growth Conference, capping the March 13-14 gathering at the Inverness Hotel and Conference Center. In an exclusive interview with ColoradoBiz, she spoke candidly about her career path and the Compaq deal. (Coming in February: Fiorina talks about battling cancer on the campaign trail.)

On Corporate Scandal
If you look at the financial crisis or Enron, or any of the scandals that have plagued the business community, it's always because people forget the basics. They forget the fundamentals of business, which is about sustainable long-term value. And they rush off for short-term gain. In a century where things are changing incredibly rapidly, where it's more and more challenging to compete, the fundamentals, the basics, are more important not less important.

On the Compaq Merger
It was clearly the right thing to do. Everybody thinks that now. HP is the largest technology company in the world. Its diversification gives it huge power. I found it interesting that recently the new CEO said, ‘Just kidding, we're going to keep the PC business,' because she and the board realized, despite earlier decisions to go differently, that the diversification of the supply chains and the distribution channels is one of HP's huge powers.
We made the decision because it was the best way to create long-term sustainable value. In the short term, I also told both the board of HP and the board of Compaq before they approved the deal that the stock would drop. I said to the HP board that our stock would drop 20 percent - it dropped 23. I was pretty close.

On Dealmaking
The board of Compaq was being told by their bankers that their stock would rise the day the deal was announced. I told them the stock would fall. It did. Deals that create long-term value aren't obvious to everyone. That's when competitively they make the most sense to do.
Doing a deal is one thing; integrating the companies is something else. We spent as much time planning for integration before we ever decided to do the deal as we did looking at the strategic logic and doing the numbers. We had an integration plan completed before we ever called a banker because we had to know we could execute. A lot of deals get done because they look like they make sense in the bankers' flipcharts, but that doesn't mean they're going to get executed.

On Combining Cultures
In point of fact, it wasn't a merger. HP acquired Compaq. We called it a merger for a very specific reason. And that was to achieve the kind of cultural integration and management team integration that was so important to this entity working well in the future.
What we didn't want is what had happened in previous acquisitions that both companies had made. The big company would acquire the smaller company, and then the management team of the bigger company would say, ‘Well, we won. We're on top. We get all the plum jobs.' That's not a way to move a team forward productively.

On Science and Technology
Science and technology is still a very male-dominated field. If you look at the data, there are too many girls who don't make it out of high school with an appreciation or a love or encouragement to be in science and technology.
We can't only depend on immigrants, although immigrants are obviously a great source of vitality and intellectual horsepower in this nation. But we're leaving minorities and girls behind. That isn't good for our country competitively, not to mention the fact that individuals are missing out on great opportunities.
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Mike Cote is the former editor of ColoradoBiz. E-mail him at mcote@cobizmag.com.

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