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Carly Fiorina Not Afraid to Run on Her Record of Accomplishment; Will Hold Barbara Boxer Accountable as a Failed Senator for California

November 04, 2009

Garden Grove, CA – In response to a press release issued today by the Democrat Senatorial Campaign Committee mischaracterizing Carly Fiorina’s record of accomplishment as CEO of Hewlett‐Packard, Deputy Campaign Manager for Communications Julie Soderlund issued the following statement:

“Carly is proud of her record of accomplishment at HP. But the real issue here is that California isn’t getting the representation it deserves under Barbara Boxer, and it’s time she was held accountable for her failed record, her inability to lead and her track record of bitter and ineffective partisanship.

“It comes as no surprise that these attacks are flying just minutes after Carly announced her candidacy for the US Senate. This is Barbara Boxer’s typical campaign tactic – to distort, mischaracterize and misrepresent her opponent’s record.”

Boxer’s Failed Record of Leadership

Of The 398 Bills On Which Boxer Has Been Lead Sponsor Since Entering The U.S. Senate, Only THREE Have Been Signed Into Public Law.

• S. 1789: “A bill to amend title 23, United States Code, to permit the use of funds under the highway bridge replacement and rehabilitation program for seismic retrofit of bridges, and for other purposes.” Became Public Law No: 103‐220 • S. 801: “A bill to designate a United States courthouse located in Fresno, California, as the ‘Robert E. Coyle United States Courthouse’.” Became Public Law No: 110‐46
• S.3550: “An original bill to designate a portion of the Rappahannock River in the Commonwealth of Virginia as the ‘John W. Warner Rapids’.” Became Public Law No: 110‐418
• In The Same Timeframe, Senator Feinstein Has Had FOURTEEN Of The Bills On Which She Has Been Lead Sponsor Signed Into Public Law. (The Library Of Congress Website, http://www.thomas.gov, Accessed 2/18/09)
• OF NOTE: “You Can’t Get Anything Passed Unless You Work Across The Aisle Because The Majority Is So Thin,’ [Boxer] Said In An Interview.” (John Wildermuth, “As An Outspoken Senator, Boxer Invites Controversy,” The San Francisco Chronicle, 10/23/04)

Carly’s Record of Accomplishment

Carly Fiorina’s vision and leadership of Hewlett‐Packard (HP) set the company’s trajectory on a long‐term path for growth and global dominance. In an era of quick profits and short‐term strategies, it is important to take a step back and undertake a sober review of historical data.

Many of the decisions made by Carly as CEO led directly to HP becoming a market leader with a global reach. Simply put, Carly made tough decisions to reform the company that were criticized at the time, but HP and its shareholders are now reaping the rewards of those decisions.

Carly became CEO of Hewlett‐Packard in July 1999 at the age of 44. Documents obtained from HP and the SEC for the fiscal years 1998 through 2005 show that the year
before she became HP’s CEO, the computer giant’s net revenue was $39.3 billion. When she left the company in February 2005, HP’s net revenues had more than doubled to $86.7 billion and continued in the years that followed.

HP’s net earnings during Carly’s time at HP tell a slightly different story. Profits increased the first few years, took a hit during the technology crash and Compaq merger, and have come roaring back in the years that followed.

Carly Made HP a Stronger Company

Despite persistent criticism from the media, rivals and political opponents since she left the company, Carly’s contribution to HP’s current strength is recognized by
knowledgeable observers.

HEADLINE: HP’s Strength brings recognition for Fiorina; Former CEO’s work is lauded as company wows analysts

…While analysts praise Mark Hurd, Fiorina’s successor as HP CEO low‐key style, many are quick to credit Fiorina for laying the groundwork. She was the biggest proponent of changing HP’s culture, and although her hard‐charging style ultimately worked against her, HP desperately needed someone like her, said Roger L. Kay, president of Endpoint Technologies Associates.

“Carly did a lot of the shaking up, which was necessary to get the hidebound organization liquefied again and that left the field open for Mark Hurd to reorganize. The ironic postscript here is that Carly deserves far more credit than she got,” Kay said. “The idea that the organization needed to be shaken up and be less technology‐centric and more customer‐centric turned out to be spot on.” Associated Press August 18, 2006 (emphasis added)

(CEO Mark) Hurd’s focus on expenses has set HP up to survive, and perhaps even flourish, in the plummeting economy. HP recently forecast that sales for 2009 would decline as much as 5%, but Hurd still is projecting a nearly 6% rise in profits. He’s using the company’s financial strength its balance sheet boasts $11 billion in cash to make acquisitions, like the $13 billion purchase of massive but flabby info‐tech consultant EDS in 2008.

He’s also pushing the notion that customers need not shop anywhere else for their computing, printing, and tech services needs. He can thank his predecessor, Carly Fiorina, for HP’s breadth and depth. She was the architect of the tumultuous 2001 acquisition of Compaq.” Fortune Magazine, March 16, 2009 (emphasis added)

HP annual reports tell the same story.

“Over the course of several years, HP has established a track record of making acquisitions, integrating them, supporting them with R&D and turning them
into market leaders with enhanced profitability.” Hewlett‐Packard 2008 Annual Report, CEO Letter

Compaq Merger Touted

While criticized by some at the time, HP leadership in 2005 and 2006 touted the merger as improving the company’s competitive position. In HP’s 2005 Annual Report – the first signed by Fiorina‐successor Mark Hurd – the Compaq acquisition is heaped with praise and support. This exact wording appears again in the 2006 Annual Report (2006, p. 4).

“In May 2002 we acquired Compaq Computer Corporation (‘Compaq’), which significantly expanded the breadth and depth of our product offerings, increased our overall scale and reach, drove substantial improvements in our cost structure and generally improved our competitive position.” Hewlett‐Packard 2005 Annual Report, p. 3

In 2006, HP’s CFO told stock market analysts and shareholders that the company had a “stronger presence in the marketplace” because of the Compaq acquisition. He also
said that much of the successful efforts at HP were already underway when Mark Hurd arrived at the company.

Robert Wayman, CFO & EVP, Hewlett‐Packard: “… Certainly the Company was a stronger presence in the marketplace based upon the Compaq acquisition, a core upon which we have built since Mark has been here.” Hewlett‐Packard at Raymond James IT Supply Chain Conference,” Fair Disclosure Wire, 12/13/06

Robert Wayman, CFO & EVP, Hewlett‐Packard: “Where we are today is certainly influenced a lot by that, but I do believe that, and Mark would acknowledge, that a lot of what was underway at HP at the time he came here was the right stuff to be underway. Hasn’t really changed much the focus of what we are doing.” “Hewlett‐Packard at Raymond James IT Supply Chain Conference,” Fair Disclosure Wire, 12/13/06

Todd Bradley, an Executive Vice President at HP, called the Compaq acquisition a “differentiator” and a “competitive weapon” for Hewlett‐Packard.

Todd Bradley, EVP, Hewlett‐Packard: “We have a great brand position right now with both HP and Compaq, and how we continue to leverage that across our multiple channels will both provide a differentiator and a competitive weapon as we deal with both existing and new competitors.” “Hewlett‐Packard Analyst Meeting – Final,” Fair Disclosure Wire, 12/12/06

An independent study by research analysis firm IDC in 2006 found the combined forces of HP and Compaq have propelled new revenue and profit levels for the company. The
study, titled “Five Years after the HP‐Compaq Merger: How Has HP Fared?” found HP integrated, progressing and profitable following the Compaq acquisition.

“In early September 2001, Hewlett‐Packard (HP) and Compaq announced plans to merge. At the time, IDC predicted the two companies would be better off together in a logical response to the forces of hardware commoditization and industry consolidation that were already underway. In the five years since the announcement, the two companies have successfully completed a massive integration effort and moved the combined company forward to new revenue and profit levels.”

“The merger accomplished what HP and Compaq set out to do in the first place ‐ it provided the critical mass and reach needed to ensure a long‐term role in an industry that is undergoing a fundamental transition,” said Jean S. Bozman, research vice president in IDC’s Worldwide Server group and co‐author of the report. “This deal enabled the merged company to grow revenue and profits in an increasingly competitive marketplace.” IDC, “Five Years after: A Results‐Oriented Analysis of the HP‐Compaq Merger from IDC,” Press Release, 11/2/06 (emphasis added)

HP’s merger with COMPAQ is now seen as a smart, profitable acquisition that has cemented the company’s position as the global technology leader.

HEADLINE: Five years after maligned merger, Hewlett Packard prospers Sure his company, Hewlett‐Packard Co., been flirting with Compaq Computer Corp. Compaq Computer Corp. The two tech behemoths had occasionally worked together on outflanking their mutual archrival, Dell Inc. Each had strengths the other coveted.

But despite all the naysaying, despite an ugly proxy fight, despite Fiorina’s nasty ouster, it looks as if the HP‐Compaq merger that closed five years ago this week (May 3) might not have been so dumb after all. Last year, HP surpassed IBM Corp. as the world’s biggest technology firm, based on revenue. It also passed Dell Inc. to become the world’s No. 1 PC firm. Atlanta Journal‐Constitution, April 29, 2007 (emphasis added)

HEADLINE: Compaq‐HP Merger was Right After All According to Stanford Business School Research

The change in attitude is due as much to Hurd’s leadership as to the fact that the logic driving the merger was sound. Business Wire, July 16, 2007 (emphasis added)

A 2008 piece in Mergers & Acquisitions Journal finds that the HP‐Compaq deal was a strong, worthwhile move.

To answer the first question, though, market watchers might consider the merger between Hewlett Packard and Compaq seven years ago. Initially, the deal was met with widespread growls, and even cost former HP CEO Carly Fiorina her job in 2005, when the consensus among deal pros and pundits was that the merger was a dud. Today, however, most agree that the merger was among the best of the decade.

Michael Dell famously referred to the transaction as the “dumbest deal of the decade” shortly after it was announced. After over a reported million manhours spent facilitating the combination, however, the consensus now among pundits is that it was a logical marriage all along. Jonathan Marino, Mergers and Acquisitions Journal, 9/1/08 (emphasis added)

In September 2009, Hewlett Packard CFO Cathie Lesjak touted the Compaq merger at an HP Securities Analyst Meeting.

“Here you have a graphical representation of our acquisitions going back to 2001. And building on one of the points Mark made earlier, you can see the strong alignment between our inorganic investments and our company strategy. For example, Compaq’s enhanced our scale in industry standard hardware.” Cathie Lesjak, HP Securities Analyst Meeting, September 24, 2009 http://h30261.www3.hp.com/phoenix.zhtml?c=71087&p=AnalystMeeting

Over the Course of Carly’s Tenure HP Increased Its Number Of Employees By More Than 60,000

In October 2005 HP Had Approximately 150,000 Employees Worldwide. “We had approximately 150,000 employees worldwide as of October 31, 2005.” (HP 2005 Annual Report , p. 15)

According To An HP Press Release, The Company Had 85,400 Employees In April 2000. “HP has 85,400 employees worldwide and had total revenue from continuing operations of $ 42.4 billion in its 1999 fiscal year.” (Business Wire, 4/19/00)

HP Stock Performance

HP and Compaq officially announced their merger agreement on September 3, 2001. Today, HP is a high‐value stock holding.

HP’s acquisition of Compaq was completed May 6, 2002. On that day, HP’s stock price opened at $17.44 and closed up $.78, finishing the day at $18.22 per share. Since that time HP’s stock price has risen 166% (it closed at $48.47 per share on October 19, 2009). In the seven years since the merger with Compaq was completed, HP stock has consistently outperformed its competitors and major indices.

Since the completion of the Compaq acquisition on May 6, 2002, HP’s stock price has grown 166% and has increased its value compared with former rival Dell. (Source:
Yahoo! Finance / May 6, 2002 through October 19, 2009)