“No Man’s life liberty or property is safe while the legislature is in session”.

- attributed to NY State Judge Gideon Tucker

Tuesday, December 8, 2009

Carly Fiorina's Checkered Corporate Past

While I don't live in California, I've observed, with interest, Carly Fiorina's campaign to win the GOP nomination for the Senate seat being elected next November.

Before Fiorina can take on the vulnerable Democrat, Barbara Boxer, she has to defeat a couple of competing Republicans.

With such a ferocious primary, and, no doubt, general election underway, I'm surprised there hasn't been more mention by Fiorina's competitors of her corporate background.

Specifically, her proximity to a sales forecasting scandal at Lucent, and, of course, he mismanagement of HP while serving as CEO.

The HP situation is the more well-known. Fiorina was viewed as having bungled the Compaq acquisition, and done some damage with her reorganizations of the firm and heavy-handed approach at the legendary but weakly-performing technology icon.

Back in the late 1990s, after Lucent's spinoff from ATT, this scandal erupted regarding overly-ambitious sales forecasts. Nina Aversano became a whistle-blower and subsequently embroiled in a lawsuit with Lucent for breach of contract.

Guess who was head of the sales force at the time? Carly Fiorina.

I've always marveled at how Fiorina escaped being touched by the scandal which became rather sensational. I recently spoke with an old ATT colleague who was aware of the situation, and my suspicions were echoed. Mind you, I do not have proof that Fiorina was involved. But what I've learned is sufficient to convince me, personally, that she probably was, or, as head of sales, certainly aware.

Thus, it's hard for me to believe that some political opponent wouldn't be pursuing their own sources to unearth the truth about that two decade-old accounting scandal.

It may seem forgettable now, but, at the time, the newly-launched Lucent was depending upon information such as sales forecasts to drive its ever-increasing share price. A price which unexpectedly plummeted soon thereafter.

Perhaps memories of such distant corporate scandals have so faded that nobody will bother. But, to me, between that incident and Fiorina's HP experience, I would have a hard time understanding why I was voting for her for a Senate seat.


Anonymous said...

Very interesting post...

As a former HP person who worked mostly with AT&T and Lucent around the time of Carly's hiring by HP, I have heard a lot about this from many former Bell System people.

First of all, at the time I was told that Carly was quite likely about to be fired by Lucent. I was also told by numerous people - some of whom worked very closely with Carly - that she was "cooking the books" and had been caught.

The prevailing view was that HP had made a major mistake hiring her - but that Lucent was anxious to dump her out the door.

I've met Carly many times - in small and large meetings - and one thing I would stress is that while she is superb at delivering a scripted message, she is horrible at negotiating or thinking on her feet. She is going to have major, major problems if she ever gets on a show like Hardball or anyplace even slightly hostile.

Thanks for bringing up this issue!

Former HP Marketing Exec

C Neul said...

Thanks for your comment.

I debated on which of my blogs to post this, and opted for this one, because, strictly speaking, it's a politically-oriented post.

My readership here is about 5% of the volume on the other one, but it just isn't current business news.

That said, I sort of understated my point about the recent conversation with my old ATT colleague.

They were much more forceful in maintaining, from their close working relationship with Carly, that they believed Fiorina definitely knew about the sales forecasting fraud.

I'm not surprised that you heard similar remarks at the time.

ATT became well-known for some people, two women in particular, vaulting from nowhere and no particular accomplishment into major management roles. Think Pat Russo. Another failure, albeit much more recently.

As a periodic lunch companion and old ATT colleague puts it, Henry Schact was the adult in charge of the nascent Lucent, and once he left, all hell broke loose.

I would agree with your comment about Fiorina's spontaneity. I saw her just last night on Cavuto's Fox News program, and she was babbling canned lines. Nothing original whatsoever.

Compare her to, say, Karl Rove or Newt Gingrich. She simply can't navigate because, one suspects, there's nothing there.


bob-nicholson said...

I really wish there was more solid evidence of Carly's knowledge and involvement in this scandal. She is promoting herself based on her success in the corporate world, when in fact her corporate track record should eb held against her. At least there is clear evidence of her mismanagement at HP. Please encourage HP employees and alumni to share their stories at http://www.calry-fiorina.com

Me said...

The Lucent-Philips partnership was an effort by Lucent to gain Philips marketing expertise for mobile phones (see http://findarticles.com/p/articles/mi_m0EKF/is_n2174_v43/ai_19574203/). Fiorina was the chair of the company formed as a result of the partnership. Basically, when it became clear that the partnership wasn’t going to work out, Fiorina and Lucent abdicated leaving Philips holding the bag. The partnership was dissolved in 1998. Peter Burrows discusses Fiorina’s role in the Lucent-Philips partnership on pp. 101-105 of Backfire (see http://www.amazon.com/Backfire-Fiorinas-High-Stakes-Battle-Hewlett-Packard/dp/0471267651).

bludsawsaj said...

question: where is there information on a lucent manufactory being moved from the south (maybe georgia?) to mexico when the workers tried to organise for health benefits. I would place the time around 1998, and it was the first time fiorina's name came to my attention. She was reported as being responsible for the plant closure. It occured to me that such hard nails cost cutting was influential in moving her up to HP. Wish i'd clipped the articles. Didn't know they would become elusive historical documents. thanks for listening.

C Neul said...

Sorry to disappoint you, but I think your story is a mistaken recollection.

Fiorina headed the sales force. It's extremely unlikely she'd have had anything to do with managing an operating facility such as you mention.