Politics

HP layoffs an issue in Carly Fiorina’s GOP campaign

Carly Fiorina was CEO of Hewlett-Packard from 1999 to 2005.
JEFF CHRISTENSEN/AFP/FILE
Carly Fiorina was CEO of Hewlett-Packard from 1999 to 2005.

WASHINGTON — Republican Carly Fiorina’s candidacy attracts attention in the crowded Republican presidential field for several reasons. Among them: She’s the only woman. She’s the only candidate with experience running a Fortune 50 company.

And she stands out for overseeing mass layoffs — a potential vulnerability as her campaign experiences a summer surge.

As CEO of Hewlett-Packard, Fiorina oversaw 30,000 job cuts from 1999 to 2005, including roughly 200 layoffs in New Hampshire, according to news accounts at the time. The layoffs prompted the federal government to provide emergency grant funds to the Granite State, which holds the nation’s first primary.

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Fiorina, in an interview with the Globe, said that layoffs were needed to keep the company competitive and reduce redundancies after a merger with Compaq. Other technology firms shed workers both nationally and in the region from 2003 to 2005, when many of the HP layoffs in New England occurred.

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“There is nothing harder than telling someone they don’t have a job any more,” Fiorina said. “I understand why someone who lost their job would be very frustrated and upset.” She said that ex-workers benefited from “the richest severance plans in the industry.”

Fiorina is enjoying a rise in the polls fueled by her performance in a GOP debate and the way she stood up to GOP contender Donald Trump over what she considered his inappropriate comments about a female Fox News correspon-dent.

The latest poll in New Hampshire shows Fiorina with 9 percent of the vote, putting her among the top cluster of candidates.

The new attention is prompting a much closer look at her candidacy — and in particular her time at HP. She touts her tenure at the top of the corporate ladder as a qualification to lead the country — while critics of her time there believe it shows the opposite.

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Fiorina’s layoffs from that era have some Republicans concerned that, should her candidacy continue to accelerate, she would be vulnerable to the same type of withering criticisms that 2012 presidential candidate Mitt Romney endured for buying companies at Bain Capital and restructuring them, which sometimes resulted in job losses.

She is, of course, not the only candidate known for job reductions. Trump’s signature line from his hit television show “The Apprentice” is “You’re fired!” and he has faced questions about layoffs at some of his sprawling business ventures in the past.

The Hewlett-Packard job cuts helped sink Fiorina’s earlier bid for elected office, a 2010 challenge to Senator Barbara Boxer of California. Boxer won by 10 points in part by making the HP cuts a central thrust of her attacks.

Fiorina spoke during a news conference in Las Vegas.
Jeff Christensen/AFP/Getty Images/File 1999
Fiorina spoke during a news conference in Las Vegas.

Fiorina took over Hewlett-Packard in July 1999 as the company was stalling with a “mandate for radical change,” according to a Harvard Business School paper on her tenure there.

Her mission was to “reinvent HP to lead in the Internet age.”

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Her tenure there was criticized by some for poor strategic decisions and causing employee morale to plummet. “Her leadership of HP was a total disaster for the company,” said Michael Beer, a professor emeritus at Harvard Business School who has written a book about the firm.

‘There is nothing harder than telling someone they don’t have a job any more. I understand why someone who lost their job would be very frustrated and upset.’

Carly Fiorina, former Hewlett-Packard chief executive 

When Fiorina took the helm, he said, the company “had problems” but was not in dire straits.

The decision to push a $24 billion merger between Hewlett-Packard and the Houston-based computer maker Compaq focused on selling computers as they were becoming less-expensive commodities.

Fiorina’s campaign disputed the idea that the merger failed, saying that the purpose of the deal was to consolidate various product lines.

“A lot of people misunderstand the HP-Compaq merger,” said Sarah Isgur Flores, Fiorina’s deputy campaign manager. “HP became a one-stop shop.”

At the time, the deal was the largest merger the computer industry had seen. HP shareholders approved it after a fight in March 2002.

Howard Anderson, a venture capitalist and longtime critic of the deal who is now a senior lecturer at Dartmouth’s Tuck School of Business, said in an interview that Fiorina’s effort to turn around HP looks as bad in retrospect as it did at the time.

“They both had fatal flaws,” Anderson said of the two companies.

Each company, he said, thought the other would bring it insights and markets that the other lacked.

After the merger, New Hampshire and Massachusetts were particularly vulnerable to layoffs because Compaq in 1998 had purchased Digital Equipment Corporation, which was once among the region’s largest high-tech employers.

On the eve of the merger, Compaq had about 6,500 jobs in Massachusetts and New Hampshire, according to news accounts from the time. HP declined to disclose how many it employed in the region then, but local employees told The Boston Globe at the time that the company employed about 500 in Massachusetts.

HP never reported exactly how many jobs it slashed in the region. The roughly 200 layoffs in New Hampshire are part of the public record because of the federal help the state received and news stories about them.

The year after Fiorina left HP, employees in the region continued to lose their jobs. Massachusetts used about $800,000 in state funds to help 266 laid-off HP workers in 2006, according to the state Department of Labor.

Some of Fiorina’s loudest critics don’t blame her for the New England layoffs, noting that those who had worked for the former Digital Equipment Co. probably would have seen their jobs disappear no matter who was in charge.

“You look at the other wannabe digital companies along Route 128, they suffered the same fate and Carly Fiorina can’t be blamed for that,” said Jeffrey Sonnenfeld, the associate dean for Leadership Studies at the Yale School of Management, who has blasted her tenure as CEO.

Fiorina addressed some concerns about impending layoffs when she came to Boston to meet with industry analysts in June 2002.

“Our salaries are frozen until all employees are entitled to a salary increase,” Fiorina said a conference room at a hotel near Downtown Crossing, according to a news story at the time in the Boston Herald.

That year Fiorina’s compensation was $4.12 million including stock options, according to data from HP proxy sheets compiled by Sonnenfeld who has studied the company for more than three decades.

The following year she took a $600,000 pay cut, making $3.5 million. She left HP in February 2005, after earning $102 million in total compensation during her tenure, including a $22 million severance package.

Annie Linskey can be reached at annie.linskey@globe.com. Follow her on Twitter @annielinskey.