Althouse: "Here’s the problem: Those numbers [Carly Fiorina] is referencing aren’t Hewlett-Packard’s profit. They are the company’s revenue."

August 18, 2015

"Here’s the problem: Those numbers [Carly Fiorina] is referencing aren’t Hewlett-Packard’s profit. They are the company’s revenue."

"And if you make enough acquisitions — especially one the size of Compaq — you can inflate your revenue figures. You can also buy growth. When a Washington Post columnist looked at her business record and suggested the numbers Mrs. Fiorina cited were misleading, her team attacked him in a point-by-point rebuttal, showing facts and figures from securities filings to back her assertions. The problem isn’t that the numbers aren’t accurate — they are; it is that the company’s expansion was a function of an aggressive acquisition strategy. The trick to real business success is increasing profitability. That’s where her explanation of her firing — 'I was fired in a boardroom brawl,' she says — is only half right. It was a brawl, but the company was unquestionably damaged."

From "Carly Fiorina’s Business Record: Not So Sterling."

80 comments:

Brando said...: Increasing profitability is always the end goal, but sometimes simply increasing revenue or market share is the better intermediate term strategy as it can position you for better profits down the road, or to stave off potential losses. Business conditions can vary quite a bit and good managers have to adjust to them.

That's part of the problem with nominating someone from the business world, as we saw with Romney--you really need to explain quite a bit to get around the attacks, and when you're explaining, you're losing. (Not unlike how legislators often have to explain complex votes that are easy to attack in campaigns). Few businesspeople can point to a record that is not just successful but easy for the layperson to understand.; 8/18/15, 8:06 AM
Jaq said...: HP is not only still around, it is the dominant player in the server business due to her acquisition of Compaq and through it DEC.

This article is basically motivated reasoning and BS.; 8/18/15, 8:08 AM
rehajm said...: Hard to see why NYT bothers with issues of profitability. She fired at least one person, which to the left is the most unforgivable sin.; 8/18/15, 8:10 AM
rhhardin said...: The usual scam is that a high P/E company starts buying low P/E companies for stock.

This produces a record of earnings growth per share, which further increases how much the market values the high P/E company since it's showing "growth."

It's fake growth, however. The low P/E companies are losers, so the scam only runs as long as people don't notice the trick. Basically the high P/E company turns itself into a low P/E company.; 8/18/15, 8:13 AM
Jaq said...: Hewlett-Packard is still recovering from the ill-conceived merger nearly 15 years later, and recently decided to split the company up.

BS, what they are splitting off is the EDS side: "Enterprise services." I don't think Fiorina had anything to do with the purchase of EDS.; 8/18/15, 8:17 AM
Jaq said...: Who would have thunk that the Democrats could order up a hit piece on the opponent they fear the most in the New York Times?; 8/18/15, 8:19 AM
Bay Area Guy said...: Obviously, the better Carly does, the more scrutiny she will face. The mere fact that she ascended to CEO of HP is impressive to me.

I hope the NYT scrutinizes Hillary's business dealings in equal fashion.; 8/18/15, 8:20 AM
exhelodrvr1 said...: This is OK, because we know that they will make sure to give equal exposure to anything negative about the Democratic candidates. That way no one can pretend to ignore the (obvious if you pay just a little bit of attention) truth when they cast their vote.; 8/18/15, 8:21 AM
David Begley said...: Compare the market cap and profitability of NYT to HPQ from 2000 to 2015.; 8/18/15, 8:24 AM
Graham Powell said...: The early 2000s were a tough time for PC makers. Sales of desktops and laptops were declining, and more important, so were margins. I think going after Compaq's server business was a good idea, although Compaq acquiring DEC in the first place was in retrospect a mistake.; 8/18/15, 8:26 AM
Jaq said...: I wonder if Fiorina somehow engineered the clusterfuck of the HP purchase of Autonomy many years into the future.

Autonomy was acquired by Hewlett-Packard (HP) in October 2011. The deal valued Autonomy at $11.7 billion (£7.4 billion) with a premium of around 79% over market price that was widely criticized as "absurdly high", a "botched strategy shift" and a "chaotic" attempt to rapidly reposition HP and enhance earnings by expanding the high-margin software services sector.[1][3][4] Within a year, major culture clashes became apparent and HP had written off $8.8 billion of Autonomy's value.[2] HP claim this resulted from "accounting improprieties, misrepresentations and disclosure failures" by the previous management, who in turn accuse HP of a "textbook example of defensive stalling" [5]:6 to conceal evidence of its own prior knowledge and gross mismanagement and undermining of the company, noting public awareness since 2009 of its financial reporting issues[5]:3 and that even HP's CFO disagreed with the price paid.[2][5]:3–6 External observers generally state that only a small part of the write-off appears to be due to accounting mis-statements, and that HP had overpaid for businesses previously.[2][6] - Wikipedia; 8/18/15, 8:27 AM
Mike said...: The people who know Carly best, hate her most. Hewlett Packard employees despise her.; 8/18/15, 8:30 AM
madAsHell said...: She should have stuck with the community organizer gig....oh, wait!!; 8/18/15, 8:36 AM
Matt Sablan said...: I'm so used to people confusing revenue and profit, that I instinctively assume journalists have it confused, especially when talking about taxes or "greed." It's kind of nice they figured it out though!; 8/18/15, 8:36 AM
I'm Full of Soup said...: Well at least she has a record and the MSM is willing to discuss it as opposed to how they overlooked or whitewashed Obama's record and his absence of accomplishments.; 8/18/15, 8:38 AM
Wince said...: Hillary's flying monkeys in the press are out in full force today.

HP layoffs an issue in Carly Fiorina’s GOP campaign

http://www.bostonglobe.com/news/nation/2015/08/17/carly-fiorina-record-layoffs-including-new-hampshire-campaign-issue/cwMt82EsE7r63hSnJKj9YK/story.html#comments

Notice how nobody except the reporter herself is named "raising the issue" when it's supposedly coming from the GOP side.; 8/18/15, 8:42 AM
Matt Sablan said...: "Some have said," "Many have suggested," "Others believe," -- Journalist for "What I want to say is."; 8/18/15, 8:44 AM
rehajm said...: AJ Lynch said...
Well at least she has a record and the MSM is willing to discuss it

It's brilliant they found someone who could speak intelligently on econ at all. You'd think they could get that person to point out Hilary's economic proposals are debunked by chapter 6 in nearly every ec101 textbook.; 8/18/15, 8:46 AM
Rusty said...: Wasn't Sorkin a bundler for Obama or Hillary? I could be wrong.; 8/18/15, 8:49 AM
khesanh0802 said...: Not many understand this kind of analysis and it will be difficult to pin much on Fiorina in this regard- it does not lend itself to political shorthand. That Fiorina was a victim of the dot com bubble and a board room fight are easy to understand - and boring to the average person. Trump's filing for bankruptcy 4(?) times is more easily understood by the masses and smells worse. The easiest to understand is Hillary's inappropriate use of a personal server: " How can anyone be so stupid?"!; 8/18/15, 8:56 AM
traditionalguy said...: Carly is good. Carly is bad. Carly is attractive. Carly is a woman with the moral authority of being an eternal victim. Carly is dominant! Or maybe irrelevant.

That is a tremendous distraction job. The media needs to run any other story than Trump being Trump to break the spell.; 8/18/15, 9:01 AM
Scott said...: Okay, if Carly Fiorina is a failure, point to one success of Hillary Clinton.

Without the use of irony.

Just one.; 8/18/15, 9:03 AM
Jaq said...: Fiorina instituted three major changes to HP's culture shortly after her arrival: a shift from nurturing employees to demanding financial performance, replacing profit sharing with bonuses awarded if the company met financial expectations, a reduction in operating units from 83 to 12, and consolidating back-office functions.[6] To many inside the company, the changes were extreme and in contradiction to the HP Way.[6] - Wikipedia

So basically, HP employees were living of the "fat of the land" before Fiorina, and if she hadn't come along, they would have continued to work that way, dot com bubble burst or no? I think that it is more that Fiorina brought a little reality to HP. HP employees at the time resented increased efficiency? LOL, who doesn't?; 8/18/15, 9:06 AM
Jaq said...: She was the Scott Walker of HP. Of course people who were comfortably ensconced in their little protected fiefdoms resented change, change that was inevitable.; 8/18/15, 9:08 AM
Jaq said...: "HP Way" = "Wisconsin Idea"; 8/18/15, 9:09 AM
Big Mike said...: If the purchase of Compaq was such a disaster for HP, then why is there an HP computer on my desk. I suppose HP could have survived without getting into the server business, but they couldn't have done it organically. Before Fiorina HP was on a trajectory to be a company that sold printers and not much else. How profitable would that have been?; 8/18/15, 9:12 AM
The Savage Noble said...: Question: were any of the "culture changes" she implemented reversed when she was replaced. In fact, what aspects of her plan were modified by her successor?; 8/18/15, 9:13 AM
rehajm said...: Rusty said...
Wasn't Sorkin a bundler for Obama or Hillary? I could be wrong.

Aaron Sorkin is the active fundraiser. Andrew Ross Sorkin is the JournoList subscriber and current Dolores Umbridge Scholar at CNBC.; 8/18/15, 9:15 AM
damikesc said...: I hope the NYT scrutinizes Hillary's business dealings in equal fashion.

Great --- got water on my monitor now.

The people who know Carly best, hate her most. Hewlett Packard employees despise her.

They ALL do? Or a small subset of them?

You know who really hates who they know the most? Secret Service agents and WH staff in regards to Hillary. Hate her.; 8/18/15, 9:18 AM
JAORE said...: The NY Times commenting on failed business leadership? It is to laugh.

The NY Times digging into the past successes and failures of a political candidate because we have a need to know? It is to laugh.

As said above, compare how HP is doing to the Times.

As said above, the Times surely made an honest assessment of Obama's (in 2008) or (currently) Hillary's achievements to the same level of detail.

It is to weep.; 8/18/15, 9:24 AM
LYNNDH said...: And I just noticed, both my computer (and a previous one) and my printer are HP. Guess she did something right. I worked for 12 yrs in "High Tech". Company did a BK, survived with massive layoffs. I survived then too. But every yr there were layoffs. Eventually the company succumbed and was bought out by another then another company bought them out. That was and is the way of HT.; 8/18/15, 9:28 AM
Jaq said...: Most of what you read on the web is served up by HP servers.

For 13 consecutive years, 52 straight quarters, HP is the #1 vendor in worldwide server shipments.; 8/18/15, 9:31 AM
Michael K said...: Carly has to get a good explanation of her time at HP on her web site and available for those of us who like her. I have heard my own version of what happened and it was about HP heirs who wanted to control the company and she was an outsider. Disney went through some of this a couple of times. U Haul was nearly destroyed by an heir fight.

I think she is gaining traction and, apparently, the NYT thinks so too.; 8/18/15, 9:39 AM
Brando said...: Let's do a fair asssessment of Hillary's accomplishments:

1) Legal career. I think she did serve as an attorney for the Watergate committee, though what she actually accomplished there I don't know. Her legal career from 1978 through '92 appears to be mostly benefitting from being the wife of the governor, so no credit there for holding a sinecure.

2) First lady. Her handling of health care reform was a mess--alienated allies, united opponents, went nowhere. She did smear a lot of her husband's accusers, so there's that--an ugly moment for feminism. Other than that, First Lady isn't really a job so that was an 8-year break.

3) Senator--during her 8 years, she backed the Iraq War (not out of character--she has backed every war since Vietnam) then turned around once things got ugly there. A real profile in courage! No other accomplishments of note, but became the front runner for the Dem nomination in '08. Surely this couldn't have been due to her Senate service, so we have to conclude she had this lead due to misplaced loyalty Dems have for her husband. She managed to blow that lead.

4) Secretary of State--the only reason Obama put her there was to eliminate her as a threat to him (she couldn't run against him in '12, and had to at least be publicly loyal). She messed up the "reset" with Russia (in fairness, it's not clear anyone could have fixed things as Putin had his own agenda that would make him a rival) and pushed for involvement in Libya which overthrew a secular tyrant (who had been moving closer to the U.S. and cooperating on nonproliferation) and leaving the country in the hands of Islamist thugs, who among other things killed our ambassador. After that, Obama lost all confidence in her and balked at getting involved in Syria as she'd recommended. And now we're learning she used her position to enrich her family, their charity scam, and likely broke several laws doing so.

It's a pretty terrible record. But I wouldn't expect much scrutiny from her flying monkeys at the Times.; 8/18/15, 9:44 AM
Michael said...: A rare instance of a progressive "understanding" the difference between gross and net.; 8/18/15, 9:45 AM
Jaq said...: Maybe you are right Michael K, I worked there for a while. I know a lot of the dirty laundry for that reason. I didn't work there under Fiorina, but it seems almost certain to me that she was brought in by the board to shake up a working culture that had become too comfortable and inefficient. Maybe Google can get away with that kind of a culture because they don't have a huge amount of international competition breathing down their neck, but HP was in a market that was becoming commoditized and the "HP Way" was not going to cut it.; 8/18/15, 9:47 AM
Dan Hossley said...: Profitability isn't a very good measure of the value of a company either. Cash Flow is more important.; 8/18/15, 10:25 AM
Rick said...: Matthew Sablan said...
I'm so used to people confusing revenue and profit, that I instinctively assume journalists have it confused, especially when talking about taxes or "greed." It's kind of nice they figured it out though!

What a coincidence they discovered the distinction just when it was important to a story damaging a Republican.; 8/18/15, 10:35 AM
Bruce Hayden said...: Someone above mentioned that they had a HP computer. Somewhat active, I have 2 HP desktops (one refurbished by IBM), 2 or 3 HP/Compaq laptops, and 3 of their printers (Laserjet, BusinessJet, and photo grade all-in-one). The desktops are decent quality, the laptops ok, and the first two printers almost indestructible. Their computers always come with a modest amount of junk software and links, but far less than many other companies (Lenova was in the news recently for the vulnerable junk they were allowing on their new computers). When IBM went out of these markets, not that many companies with long term quality remained. HP, Dell, Apple, and who else? And Apple products still come with the personal preferences of Steve Jobs locked in - not something I will deal with if I can avoid it. Plus, you still pay a big premium to be locked into his preferences. My biggest problem with HP was dealing with Indian tech support on what is now my main laptop. It took 6 weeks of broken promises until I got an Amican on the phone, who very quickly replaced the laptop. That was 7-8 years ago, the battery is dying, too little memory, but will be using it in a couple of hours.

My view is that she is probably the only reason that the company survived and didn't start dying off. Have dealt with them for 45 years now, some as a contractor (mostly as a patent attorney). And I remember when she was doing her thing there. A lot of very upset people who had grown up in the old system. And, they made mistakes - like going from too many patent apps to too few,mbut ultimately finding a better level. And I think that their reverse auction resulted in a big loss of quality. But the company(/ies)!changed for the better (did work for Agilent too). And I think that her experience taking a meat cleaver to the HP ranks would be good experience for reforming the federal bureaucracy - the only person I think might have been better would have been Mitt Romney.; 8/18/15, 10:40 AM
Earnest Prole said...: Rebutting a New York Times article on business fundamentals is like hunting cows. To offer but one example that anyone with a passing acquaintance with business would know, the trick to amazon.com’s success has been anything but profitability. It very famously spent 20 years turning no profit whatsoever during its rise to dominance.; 8/18/15, 10:46 AM
Bruce Hayden said...: Brando - I wouldn't have been as generous with Hillary for the time she spent practicing law. She started by getting kicked off the Watergate investigation for ethics transgressions. And there were a number of other ethical lapses and questionable transactions along the way, including the cattle futures (a pretty egregious bribe), Whitewater, the S&L, missing billing records, etc. Kinda like practice for when she was a Senator, then Sec of State.; 8/18/15, 10:49 AM
Brando said...: "What a coincidence they discovered the distinction just when it was important to a story damaging a Republican."

Don't worry--they'll get right back to misunderstanding the distinction when it comes time to talk about the fast food industry making millions of dollars per store and not being willing to give their employees an extra five bucks an hour.; 8/18/15, 10:49 AM
Brando said...: "Brando - I wouldn't have been as generous with Hillary for the time she spent practicing law. She started by getting kicked off the Watergate investigation for ethics transgressions. And there were a number of other ethical lapses and questionable transactions along the way, including the cattle futures (a pretty egregious bribe), Whitewater, the S&L, missing billing records, etc. Kinda like practice for when she was a Senator, then Sec of State."

Yeah--I was trying to be charitable as though I was in charge of writing her resume. I guess she'd be the sort of candidate who would list a lot of impressive sounding positions but have no actual accomplishments described below those positions.

If you strip away the connection to her husband, there really isn't any reason for anyone to support her. She's sold out the Left repeatedly, and turned on the center just as often. She's hardly the "only" chance for a woman to get elected president--in fact several are waiting in the wings but stepped aside for her sake.

So why are they so loyal to the Clintons? Part of it is misplaced nostalgia (associating happier economic times with the president who was fortunate enough to coincide with them) and the other part fear. They know that crossing these people can get very ugly, particularly if they gain power. Obama was fortunate in that he beat her--if she'd pulled out a victory in 2008, he'd be in political oblivion right now.; 8/18/15, 10:54 AM
Tom said...: Stock price moves mostly by increasing revenue, not necessarily earnings. Earnings are important but not at the expense of reinvestment or silly cost reductions. Profits can also be manipulated. HP was one of Jim Collins' Good to Great Companies. It's still a good company. But I'm not sure that's Carly's fault. HP has performed decently against the growth of Apple and Google. It didn't turn into a mediocre company like Sony. And it may still have a bright future. There are some who'd like to use HP's struggles in a competive marketplace against Carly to make her into the next Sarah Palin. I'd avoid doing that. She was in the arena and fought the fight. And she's a good leader. I don't know if she can be president but I won't discount her.; 8/18/15, 11:06 AM
Michael K said...: "Profitability isn't a very good measure of the value of a company either. "

Somebody beat me to the Amazon story.

I drove by an empty Sears store again yesterday. Sears is such a sad story and I worked for them once way back in the dark ages.

They are an example of what management can do to a fundamentally strong brand. Sears began as a catalog store. They closed their catalog division just as catalogs became the "next big thing" and Amazon took off. Sears could have been Amazon. They had the infrastructure but not the technology. Too bad they didn't hire Carly.; 8/18/15, 11:11 AM
Kyzer SoSay said...: Dan Hossley: Profitability isn't a very good measure of the value of a company either. Cash Flow is more important.

I don't really understand the distinction. I read what the terms mean but it's still not quite gelling in my head. I'm not saying the above is wrong, just that out of ignorance I cannot know for myself. Any explanation would be appreciated.; 8/18/15, 11:39 AM
Brando said...: The other thing is that while shareholders will usually punish or reward executives based on the company's performance on their watch, it's also possible for a good executive to preside over bad times for the company and for the opposite with bad executives. It could be that the company failed despite your leadership, or succeeded despite your failures as a manager. Sometimes forces outside your control can have bigger effects--taking over a car company that specializes in gas guzzling vehicles just before the 1973 oil embargo would have causes losses for even a great executive, as there's lag time in getting fuel efficient cars developed and on the market. Taking over a tech company at the burst of the tech bubble would likewise have been a challenge.

An honest assessment of Fiorina's tenure would have to take into account what her challenges were, and how she handled them. It would be the best way to measure her abilities and character.

We should do the same with our politicians--how did Kasich, Perry, Walker, Jindal and Christie handle the economic crash in their respective states? (Perry should have the most complete record, as he took office at the time of the early '00s crash, and governed past the recent recovery). How are Rubio, Cruz et al handling the legislative matters that the Senate has been dealing with? (Not a lot to be proud of there, but as noted above, perhaps no one could have accoplished anything in this Congress).; 8/18/15, 11:39 AM
jr565 said...: Why is acquisistion not part of a company's overall success. If anything, if you spend billlions on a acquisition it might, short term, impact on your profits negatively, even though, had you not had the aquistiion you would have been more profitable.; 8/18/15, 11:40 AM
Matt Sablan said...: "I'm not saying the above is wrong, just that out of ignorance I cannot know for myself. Any explanation would be appreciated."

-- If you make lots of profit, but are unable to reinvest it, or even just use it on things you want, then it is stuck in the bank doing you no good.

Profitability is important, but if you can't DO anything with your profits, you may have a problem.; 8/18/15, 11:52 AM
Matt Sablan said...: "Why is acquisistion not part of a company's overall success?"

-- It can be, but you have to analyze it a bit more than "not in the red."; 8/18/15, 11:52 AM
Diamondhead said...: Kyzemick, bottom line profitability is net of non-cash expenses like depreciation and amortization. Imagine you depreciated all of your property and equipment in one year..you'd look much less profitable, but that wouldn't give any indication of the value of your operations.; 8/18/15, 11:53 AM
HoodlumDoodlum said...: I haven't read the article so I can't say if they're wrong or not, but assuming arguendo that they're making a valid point...when can we expect that sort of reasoning to be applied towards ANYTHING the government does? Oh, you signed up 10 million people to O'Care, so that's a success? Were those the right 10M, what will it cost to serve them, etc? Either the net number (profitability, cost) counts or it doesn't--the Left is happy to report the top line number (5M jobs created in the last 4 years!) when it suits them, ignoring the net (gov. spending exploded, those 5M jobs are on a larger population base due to growth + the overall labor force participation is lower so net employment as a % is lower, etc).
But I get it, she's GOP, so it's time to put on your analyst pants. If it's an Obama Admin announcement, though, rejoice at the misleading topline numbers!!!; 8/18/15, 11:56 AM
Known Unknown said...: "in fairness, it's not clear anyone could have fixed things as Putin had his own agenda that would make him a rival"

Mitt Romney stated that Russia was our #1 geo-political foe in 2012. He was scoffed at.; 8/18/15, 11:58 AM
damikesc said...: Mitt Romney stated that Russia was our #1 geo-political foe in 2012. He was scoffed at.

Also said removing all troops from Iraq was "tragic".

He was scoffed at there, too.

Don't worry--they'll get right back to misunderstanding the distinction when it comes time to talk about the fast food industry making millions of dollars per store and not being willing to give their employees an extra five bucks an hour.

One wonders why the NYT isn't offering to up their employees pay significantly instead of championing fast food franchises deal with it.

Yeah--I was trying to be charitable as though I was in charge of writing her resume. I guess she'd be the sort of candidate who would list a lot of impressive sounding positions but have no actual accomplishments described below those positions.

She would include the miles she travelled as Sec of State, no doubt. Because "going lots of places on the taxpayers dime" is the same thing as an accomplishment.; 8/18/15, 12:14 PM
Brando said...: "Mitt Romney stated that Russia was our #1 geo-political foe in 2012. He was scoffed at."

The bigger mistake was Obama/Clinton's hubris at thinking the troubled relations with Putin were Bush's fault (because Bush was so undiplomatic with his cowboy ways) and that they could "reset" it. They never appreciated that Putin has his own plans for Russia and he cares not at all about what the U.S. wants. And standing up to us only makes him more popular.

Romney was right about the challenges Russia presents, but I'd say China is a more serious rival (I wouldn't say "enemy" as our relationship with China is more complicated than that). Of course Obama in 2012 needed everything to look increeasingly peaceful with an economic recovery, and he was successful in pushing that narrative.; 8/18/15, 12:16 PM
Michael K said...: "Profitability is important, but if you can't DO anything with your profits, you may have a problem."

Ask Eastman Kodak about that. Oh wait...

Med Whitman is doing pretty much what Carly did at HP.; 8/18/15, 12:20 PM
Brando said...: "One wonders why the NYT isn't offering to up their employees pay significantly instead of championing fast food franchises deal with it."

Media companies like the Times are going to be in an awkward situation if their progressive heroes get their way and get contractor employees (such as free lance writers) treated as employees. But this is the same newspaper that decided the fillibuster was an affront to the will of the people, then it was a useful check on majority power, then back again, twice more. I'm sure they'll have a "rethinking" of this position again soon.

"She would include the miles she travelled as Sec of State, no doubt. Because "going lots of places on the taxpayers dime" is the same thing as an accomplishment."

It's hard work shaking down foreign donors for her family slush fund while pretending to do State Department work! If we did a ratio of "miles traveled" to "actual accomplishments" it wouldn't be pretty. But "miles traveled" to "amount coincidentally raised into the Clinton Foundation" might be more instructive.

It'd be nice to have a real media outlet follow this path.; 8/18/15, 12:21 PM
Known Unknown said...: "but I'd say China is a more serious rival"

The problem is China can't survive without our consumerism, so they can't really afford to be our direct rival. A healthy and successful US means an economically viable China.; 8/18/15, 12:42 PM
damikesc said...: It's hard work shaking down foreign donors for her family slush fund while pretending to do State Department work! If we did a ratio of "miles traveled" to "actual accomplishments" it wouldn't be pretty. But "miles traveled" to "amount coincidentally raised into the Clinton Foundation" might be more instructive.

It seems clear that the media covers negative stories long enough to say "Hey, we covered that" but not enough, usually, to damage. That "Clinton Cash" book was really, really damning.; 8/18/15, 12:59 PM
Alex said...: Actually the early 2000s were a great time for the PC industry. No iPad around to draw customer away from PCs. No Macbook Air either. Basically the WinTel monopoly made hay while Apple was building up their big guns for the future.; 8/18/15, 1:07 PM
jg said...: Philip Greenspun notes: "The people who took over from Fiorina at HP haven’t had any better success, have they? She never did anything as monumentally stupid as Leo Apotheker’s acquisition of Autonomy, for example (HP’s lawsuit against Autonomy’s executives, Michael Lynch and Sushovan Hussain, is still going, trying to recover some of the $5 billion of shareholder wealth squandered). Perhaps HP is simply tough to grow in a world where Apple owns the hipsters, Microsoft owns the desktop and workgroup, and IBM owns the core IT functions."

That said, I think she's more appealing w/o the HP stint. She fought her shareholders (poison pill to force a merger etc) and was pretty unpopular (don't know if she was wrong, but she was fighting the historic company culture); 8/18/15, 1:24 PM
Brando said...: "The problem is China can't survive without our consumerism, so they can't really afford to be our direct rival. A healthy and successful US means an economically viable China."

That's what makes it so complicated. They're a competitor, in many cases playing by different rules (stealing IP), but dependent on trade with us as we are with them. They're also sort of a fascist state, which we tolerate but don't approve of, and we're often at cross purposes in foreign policy. So not an enemy like Nazi Germany, but not exactly a friend like Britain.; 8/18/15, 1:30 PM
Jaq said...: Alex, why don't you check out Dell's stock price around that time and since?

https://www.google.com/finance?cid=153088

Here, I will make a link for you Dell Stock Price

Then click on "All" in the "Zoom" section at the top, then come back and school us some more on the tech industry around the turn of the century.; 8/18/15, 2:08 PM
damikesc said...: That said, I think she's more appealing w/o the HP stint. She fought her shareholders (poison pill to force a merger etc) and was pretty unpopular (don't know if she was wrong, but she was fighting the historic company culture)

If she was a Dem, it'd be she fought to protect her company from an evil merger and sought to shake up a tired and ineffective culture.

Then again, if Clinton was a Dem, we'd have several posts about her stated plan to only discuss racial issues with white folks from now on. Which she said.

"If that is your position then I will talk only to white people about how we are going to deal with the very real problems." --- Hillary to BLM activists.

And this wasn't a "screw you" to the activists. It was an earnest suggestion by her.; 8/18/15, 2:37 PM
averagejoe said...: What was Obama's business record, or record on anything? A community organizer, a half-assed state senator, and a half-term do-nothing US senator. Record of tangible accomplishment= 0. What was Bill Clinton's business record before he was elected POTUS? Some shady, corrupt shakedowns and illegal shenanigans in which The Clintons used their power as state executives to circumvent the law and enrich themselves. How about George W Bush's business record? The only POTUS ever with an MBA. Made a fortune selling his shares of a professional baseball team. I guess Carly needs to brush up on her crony-capitalist bona fides, and learn how to shake down "the little guy", like democrat party kapos do.; 8/18/15, 2:42 PM
Joe said...: "The trick to real business success is increasing profitability."

Pure bullshit quoted from the article. If "real business success" was measured in "increasing profitability" all businesses would be failures.

I don't think Fiorina was a great CEO of HP, but she wasn't terrible either. Without her, however, I think HP would have gone bankrupt by now. Though they did make high quality hardware, it was a stodgy, over-bureaucratized company. It wouldn't have survived the dot com crash.; 8/18/15, 5:01 PM
The Godfather said...: I would be happy if a successful business executive were elected president in the tradition of the great success of the [fill in the blank] administration.

Seriously. Fill in the blank.

The closest I can come is Hoover, and really he was an engineer, not so much an executive.

Anyone else?; 8/18/15, 5:39 PM
Bruce Hayden said...: Theoretically/classically, what should matter is profitability, when determining stock value. The stock price should reflect a discounted expected income stream. For some companies, that means earnings supported by profits/earnings. But for some, much of the stock value is in the expected increase in stock price. I think that when I was in business school, the example of that was IBM, which didn't pay dividends, but did have (at that time) steadily rising sales and profits - they just didn't pay dividends. I think that eventually, when their sales revenues flattened, they found themselves having to pay dividends. Maybe to summerize, some companies, esp in the tech sector, can getawaywithnotpaying dividends, based on the belief that their revenues are goingtocontinue to grow quickly, and when their revenues flatten out, they will be at a place where they can pay big dividends. Or something like that.; 8/18/15, 7:03 PM
Michael K said...: "The closest I can come is Hoover"

Hoover made some money in mining but most of his resume was government and he was a Progressive,

Few businessmen are interested in politics. The best example I can think of was Andrew Mellon who was Coolidge's Secretary of the Treasury and who presided over a great boom that we (because of leftist historians) call the "Roaring Twenties." It was the equivalent of the 1990s for which Bill Clinton gets credit although he had nothing to do with it. The 1994 Congress is responsible. Look at a stock market chart sometime.

I think we would have had a similar boom if Romney had won but he didn't.; 8/18/15, 7:25 PM
John Henry said...: Blogger Michael K said...

"The closest I can come is Hoover"

Hoover made some money in mining

"Some" money in mining? How about becoming one of the wealthier men in the world. Wealthy enough that when WWI broke out he retired and devoted his full time to 1) Getting Americans stuck in Europe home and 2) Feeding the Belgians. He did the first out of his own pocket with no expectation of repayment and the second he did for no pay and considerable expense and even more physical danger.

Herbert Hoover probably saved 20 million people from death by starvation during and immediately after WWI.

His memoirs are available free at the Hoover library in PDF. An excellent bio up to 1920 is by Vernon Kellogg who worked with him feeding Europeans. Its in Gutenberg and probably free for Kindle. Both are excellent. Interesting and well written.

People can differ about President Hoover but the private Hoover was one Hell of a businessman and humanitarian.

After August 1914, he never worked again and lived very well. He did serve as President and Sec Commerce but did it for a dollar a year.; 8/18/15, 8:01 PM
John Henry said...: I can't believe that in 70 posts everybody has missed the goal of business and what a CEO should be devoting 24 hours a day to.

It is not profits
It is not revenue
It is not sales
It is not cash flow
it is not market share

There is one Single goal that all successful businesses must pursue with a singleminded focus to be successful.

They must increase shareholder value.

Nothing else matters.

A coupled of caveats:

There may be a few exceptions to the above but I can't think of any off hand

Profits, revenue, etc may be great tools for increasing shareholder value but they are not the goal. They are only tools to be used in achieving the goal.

Shareholder value is what matters.

John Henry; 8/18/15, 8:05 PM
MD Greene said...: Funny how "businessman" Terry McAuliffe's failed records with Global Crossing and Green Tech didn't stop him from becoming governor of Virginia. Those turkeys cost investors plenty but made him a very wealthy man. It's nice to be a FOB.

Fiorina was hired to make drastic changes to a company that was stampeding into the tar pits. Any strategy was risky, but no strategy was certain death. She got sandbagged by the children of Hewlett and Packard who sat on the board but, unlike their dads, had no business sense that included better ideas than Fiorina's.

There's something to be said for people who are willing to go down fighting.

This is not unlike the Times coverage AD NAUSEM of Bridgegate when Christie seemed like a prospect. There are plenty of bigger scandals in Jersey, but so far the grey lady isn't interested in them.

You'd almost think it was political.; 8/18/15, 8:10 PM
John Henry said...: Off topic but one more comment about Hoover. He was probably the best writer of any of our presidents. He wrote a number of books on a variety of subjects from fly fishing to mining.

I could care less about mining but nevertheless found his 1912 book "Valuation of mining properties" (Name from memory) fascinating. The 3 volumes of his memoirs up to his driving to California after leaving the White House are fascinating.

The only one I can think of who comes close as a writer was Theodore Roosevelt.

John Henry; 8/18/15, 8:10 PM
John Henry said...: Bruce,

I had thought that IBM had traditionally paid dividends. But I might be wrong.

the most famous stock not to pay dividends is Warren Buffett's Berkshire Hathaway. Buffett's philosophy on this is that the profits are already taxed once. If they pay them out as dividends, the recipient will have to pay taxes again and then reinvest them.

B-H probably has better investment opportunities than the individual so it makes sense to just leave the money there, single taxed, until the recipient needs it for something.

B-H has also never split. It is currently a bit more then $200,000 per share. (Class A voting stock)

Buffett may be worth 68 billion but his annual income is something like $40 million. Until not that long ago it was considerablly less. Under $10mm IIRC. He gets a salary of $100,000 from B-H and has not had a raise in decades. He does get some nice bonuses, though.

John Henry; 8/18/15, 8:20 PM
The Godfather said...: I'm pleased that several commenters picked up on my reference to Hoover. He wasn't a good President, but he was a heck of great guy.

The reason for Carly is not that she was a successful business executive -- maybe she was, maybe she wasn't. The reason is that she is an effective attack dog against Hillary! Traditionally, the VP nominee of one party is supposed to be the attack dog against the Presidential nominee of the other party. I continue to like Walker as the Republican Presidential nominee, but he's not a rabid dog. Carly is. They'd make a good team.

If Hillary! fails to get the Democratic nomination (again!), then there are other potential attack dogs against Biden, Sanders, the guy from Maryland, etc. That's pretty easy. Others could do the job, but Carly would be good. I don't know who would be better. Do you?; 8/18/15, 10:02 PM
Alex said...: Tim - you do have a point about Dell. The stock had already cratered by the time the iPad had come out. The narrative from the tech media is that "the iPad killed the PC", but I'm thinking that the PC killed the PC.; 8/18/15, 10:11 PM
Diamondhead said...: John Henry, increase shareholder value in the short or long term? For the day trader or the institutional investor? I'd say most disastrous executive decisions get made with an eye toward stock price rather than operating metrics. I certainly agree that businesses exist solely to provide a return on capital, but if markets are rational, return is created by profit over the long-term. I just mean I think a CEO should go to work in the morning thinking how can I improve margin or how can I cut costs instead of how can I make the stock price tick up today?; 8/18/15, 11:56 PM
Brando said...: "Shareholder value is what matters."

That is true, but even that raises additional questions--shareholder value in the short term or long term? Higher dividends or higher growth in stocks? Higher short term risk compared to long term gains?

This is also why determining what to pay your executives can be tricky too--if your incentives are geared too much towards the short term, you may end up with a brief stock bump that in the long term harms the company.

The interesting thing about Bezos and Amazon is their low or negative profits for so long hasn't harmed Amazon's stock prices, probably because investors see revenue growth and expect profitability to increase down the road.; 8/19/15, 7:40 AM
Anonymous said...: tim in Vermont said:
Most of what you read on the web is served up by HP servers.

For 13 consecutive years, 52 straight quarters, HP is the #1 vendor in worldwide server shipments.
----

Don't be fooled by that statistic. I was a Director at Sun right at that time and am well aware of how that is gamed. Is it measured by value or by ports? If it is just units, what is the breakdown by market niche e.g. small biz, enterprise, institutional, etc.
And how many of those servers are actually providing content to the WWW as opposed to being confined to a company intranet, used in product development, provide advanced local computing and data management, drive DIY apps, etc.; 8/19/15, 12:20 PM
Thos. said...: "And how many of those servers are actually providing content to the WWW as opposed to being confined to a company intranet, used in product development, provide advanced local computing and data management, drive DIY apps, etc.[?]"

What difference does that make? People need servers for lots of reasons, yes. Regardless of the reason, the #1 supplier of servers is HP - and has been for a long time. (In the tech world, 13 years is close enough to forever as makes no difference.); 8/19/15, 11:36 PM