Backfire: Carly Fiorina's High-Stakes Battle for the Soul of Hewlett-Packard (Hardcover)

by Peter Burrows (Author) "The line started forming outside of the Court of Chancery in Wilmington, Delaware, at 3:00 A.M..." (more)
Key Phrases: value capture updates, corporate governance experts, printer business, Wall Street, Walter Hewlett, Deutsche Bank (more...)

Editorial Reviews

From Publishers Weekly
Burrows, who reported on the merger of technology rivals Hewlett-Packard and Compaq for Business Week during late 2001 and early 2002, turns the notes from his day job into an uncompromising look at the deal and the woman who set it in motion, HP CEO Carleton Fiorina. Although George Anders's Perfect Enough covers the same territory, this account distinguishes itself with a deeper portrait of Fiorina. Beginning with her childhood as Cary Carleton Sneed, Burrows traces Fiorina's ascent through a second-tier MBA program to early positions at AT&T and Lucent, uncovering former associates who shadow her success story with tales of ruthless ambition and a tendency to abandon ventures before she could be tainted by their failure. Burrows also depicts the discord within HP ranks over Fiorina, whose marketing-honed strategies were seen as a betrayal of the "HP Way," the leadership principles established by the company's founders. Walter Hewlett, the second-generation director whose opposition to the merger intensified the shareholders' vote, gets substantially less play here than in Anders's version, and Burrows is much less accepting of Hewlett's version of events. But his skepticism also applies to HP's enthusiasm for the Compaq deal, which many industry experts scorned as a recipe for disaster. HP executives eventually stopped cooperating with Burrows once they determined they wouldn't be able to spin his reportage, but the book still manages to provide a richly detailed version of the legal wrangling that finally brought the deal to a close. Although the prose is somewhat hurried, the comprehensive and near-instantaneous analysis will impress business readers.
Copyright 2003 Reed Business Information, Inc.

From Booklist
The now-famous garage in Palo Alto, California, where Bill Hewlett and Dave Packard started their company, is commonly known as the "birthplace of Silicon Valley." The humble beginnings and camaraderie that "Bill and Dave" had with HP workers formed the basis of what was known as "the HP Way," a noncompetitive, family orientation. This steady-as-she-goes attitude kept the company in consistent double-digit growth for decades. Flash forward to 2002. Both founding members of the company are gone, and son Walter B. Hewlett is suing high-powered CEO Carly Fiorina over her questionable merger with beleaguered Compaq. Fiorina was brought on board to make sweeping changes to the company, not the least of which was eliminating the HP Way. Burrows' narrative follows Fiorina's rocketing career from AT & T through Lucent Technologies through her signing as CEO of Hewlett-Packard, and focuses on the controversial merger with Compaq. Bold and brash but completely composed, Fiorina always succeeds in making the big moves and somehow manages to escape responsibility for the collateral damage. David Siegfried
Copyright © American Library Association. All rights reserved

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Product Details

• Hardcover: 304 pages
• Publisher: Wiley; 1 edition (February 15, 2003)
• Language: English
• ISBN-10: 0471267651
• ISBN-13: 978-0471267652
• Product Dimensions: 9.1 x 6.1 x 1.1 inches
• Shipping Weight: 1.2 pounds (View shipping rates and policies)
• Average Customer Review: 3.9 out of 5 stars See all reviews (22 customer reviews)
• Amazon.com Sales Rank: #591,259 in Books (See Bestsellers in Books)

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Customer Reviews

Most Helpful Customer Reviews

40 of 43 people found the following review helpful:

5.0 out of 5 stars A Reporter's Eye with a Thriller's Pace, February 11, 2003

By	Gary Griffiths (Los Altos Hills, CA United States) - See all my reviews (TOP 500 REVIEWER)    (REAL NAME)

"Backfire", Peter Burrows' remarkable chronicle of Hewlett-Packard's controversial acquisition of Compaq, marks an important milestone in the rich technology heritage of Silicon Valley. "Backfire" is far more ambitious than the pabulum typical of business writings. In order to build a cogent thesis, Burrows takes on a broad range of topics, including pertinent biographical background of the key players, the legend and lore of Hewlett Packard - the company and the founders - and the arcane mechanics of proxy votes and corporate government. But while the subject matter risks could easily yield a pompous and boring analytical tome, the author injects exactly the right amount of intrigue, drama, treachery, and humor while capturing characters that are wholly believable in their flaws, foibles, and ultimate victory or defeat. The economy of Burrows' prose, sharpened by years of reporting for "Business Week", yields a tale that is a true page-turner with much more energy, excitement, and personality than the standard business fare.

Any frequent "Business Week" reader knows that Burrows is no fan of Carly Fiorina. Consequently, the author was not granted official access to either Fiorina or HP officials (HP denies any connection, citing only "scheduling conflicts"). Notwithstanding, his portrayal of HP's embattled CEO is vivid and wholly believable. Fiorina, the marketer and master-of-spin with no prior CEO experience, is injected into the venerable but stumbling culture of Hewlett-Packard. A veteran of the politics and bureaucracy of AT&T and Lucent, she is an unusual match for the techno-nerd culture of HP, where products trump hype and integrity and loyalty are revered. But while Burrows' criticism of Fiorina is biting and unrestrained, due credit is given to her tenacity, oratory skills, and relentless dedication to completing the acquisition at all costs. Walter Hewlett, who rises from a cocoon academic obscurity to fight-the-good-fight is treated much more charitably, but he only barely qualifies as the hero of the tale. While recognized for his honor and integrity in refusing to allow the proxy fight to deteriorate into personal attacks on Fiorina, his actions and judgment as a board member in the weeks and months prior to the planned merger's announcement are rightfully questioned. If there is a villain in the story, it is HP's board of directors. It is the board that passively watched while HP failed to capitalize on the rise of the Internet in the mid-late nineties, allowing HP to degenerate to a position of significance only in its printers. It was the board that initiated a bizarre, if not amateurish, CEO search leaving Fiorina as virtually the only real candidate for this high-profile job.

Much is made of the demise of the celebrated "HP Way". But Burrows wisely resists the temptation to attribute all of the responsibility for this decline on Fiorina. While it is successfully argued that she failed to grasp the true significance of this unique culture, further alienating frustrated employees, by the time Fiorina arrived on the scene it was already in steep decline. What was once an honored tradition of mutual respect and pride in innovation had been replaced by a sense of entitlement and an excuse for sloth. It is unfortunate, Burrows notes, than in the age of Enron and WorldCom, with corporate America in desperate need of the principals and values that embodied the "HP Way", that there is little chance of resuscitation under Fiorina's reign.

In summary, "Backfire" is a masterful portrayal of the rise-and-fall of an American icon, and a revealing exposé for the behind-the-scenes machinations of history's largest technology merger and ugliest proxy fight. It is a must read for anyone interested in the history of Silicon Valley, executive leadership, corporate governance, or corporate culture. In the subsequent dissections of the HP/Compaq post-merger failures (or, less likely, successes) that are sure to come over the next several years, Peter Burrows' "Backfire" will serve as a frequently quoted and pivotal reference point.

13 of 14 people found the following review helpful:

5.0 out of 5 stars Computer server business assessment needed in book, June 19, 2004

By	James Maxwell (Santa Clara Valley, California) - See all my reviews

I enjoyed this book as it contained substantial original reporting that is not duplicative of the work that others have done. I would have liked to see more material concerning bottom line issues. The bottom line issue that has the most resonance for me is the Wall Street assessment, both now, and at the time of the merger, that HP's non-printing businesses have no value on the Street. In other words, if HP were to be bought by some other firm, the Wall Street consensus is that such an acquirer should simply eliminate the other businesses. HP's value is actually less as currently structured because eliminating these other businesses has closing costs associated with this shutdown activity.

The clear implication here is that Walter Hewlett was absolutely correct in opposing this merger, since the result clearly is that 20 billion dollars was completely wasted, and precious time is still being lost on ineffective strategies to revive these businesses. With the benefit of hindsight we can say that Walter Hewlett should have been given more credit than he received, even from Burrows, for opposing this capital and job destruction, even in the face of Fiorina's personal attacks.

This book should have pointed out that these at-risk businesses can still be saved, particularly the server and server-related businesses, with the appointment of proper management by the Board of Directors. What they need to be looking for this time is not someone whose picture has been on the cover of "Fortune" magazine, as was Carly's before she was hired, but someone with the knowledge and interest in saving HP. Carly not only does not have the engineering expertise, she simply creates the impression that she has no interest in HP's existing businesses, even printing, which she has left to wither on the vine in a new investment sense.

HP has had a computer server business for over 25 years. It is a big market, roughly 50 billion yearly and rising. HP has 27%, but has failed to gain any share at all from the collapse of Sun Microsystems. Instead, customers are transfering to IBM and Dell, which should be a big wake-up call for the Board. Dell Computer is number one in market position for the key Linux server business, perhaps because of HP's totally insular and uninformed approach to this market. A lot of hard work by HP employees went into building a formerly successful server business, it is senseless to discard this potentially excellent business because Carly is more interested in trying to sell MP3s at Starbucks, something that will never generate much profit.

I would have liked to have seen a clear statement in this book that if in the summer of 2004 if HP's non-printer businesses are still worth zero, that the HP Board of Directors needs hire a new CEO. Doubtless they prefer to have a charming dialogue with Carly about her boneheaded hipster ideas involving HP products in Starbucks rather than argue with some computer nerd about computer enterprise/service-provider product investments, but I would argue that being true to their responsibilities requires that they do the later, whether they like it or not. It would have been good for Burrows' book to say so.

11 of 12 people found the following review helpful:

3.0 out of 5 stars OK intro to HP, but stops short, May 9, 2006

By	Robert J. Crawford (Balmette Talloires, France) - See all my reviews (TOP 500 REVIEWER)    (REAL NAME)

HP is a company in transition. For decades one of the fastest growing companies in history, it is now seen as a beleaguered giant, risk averse and unable to transform itself.

This book situates the company's crisis in the context of the ascension of Carly Fiorina to the position of CEO and her brutal fight to acquire Compaq while changing the company.

The origins of Hewlett-Packard have become the stuff of legend. During an electrical engineering class at Stanford in 1934, Bill Hewlett and David Packard began to formulate a vision for a company; their professor, Fred Terman, immediately recognized their talent and set about to mentor them. Four years later, in a rented garage with just $538, Hewlett and Packard, flipping a coin to decide whose name would come first, founded Hewlett-Packard. From the start, HP strove to create innovative technology products, predominantly in the instrumentation and measurement field. Their first big break came with the Disney company's purchase of an audio oscillator, which it used to fine tune the sound track for the experimental music film Fantasia. As the company grew, the founders articulated a series of objectives ("the HP Way"), which included the necessity to make a profit with a focus on innovation in the electronics field, but also an egalitarian culture that emphasized employee profit-sharing, career opportunities, and a contribution to the community.

According to many employees, the HP Way helped to create an exceptional work environment, in which individual opinions mattered and strong personal relationships of trust grew along with professional engagement. Many HP employees spent their entire careers at the company. According to David Packard, HP sought to balance entrepreneurship against insubordination: if an employee chose to continue to develop a product on his own after it was officially terminated, he often would be allowed to do so within limits. Time and again, Packard found, such entrepreneurship resulted in breakthrough instruments, such as oscillator viewer screens, that generated millions of dollars in revenues. To maintain this entrepreneurial spirit, as profitable groups grew within HP they were allowed to function as near-autonomous divisions. This was particularly well suited to the booming electronic instrument business: with a few hundred thousand dollars, a small group could develop a product for a unique area of need and then sell it on their own. For decades, this structure worked. From 1958 to 1998, the company grew an average of 20.2 percent per year, a record that no other company has surpassed.

As Burrows relates, during the late 1960s, HP began to develop computers and related product lines and technologies. This represented a major departure for the company, away from its core business of electronic instrumentation. While the move opened huge new areas of potential profit - from printers and personal computers to pocket calculators and specialized semiconductor processors - it vastly increased the complexity of the company. Not only did R&D often require millions of dollars over decades to develop competitive product lines, but by the end of the 1990s there were over 80 quasi-independent businesses under the HP umbrella; often operating in separate geographical regions, each of these groups had its own sales force, its own engineers and designers, and its own software developers. By 1997, when HP began to miss its financial targets for the first time, many in the company began to fear that it was losing its way, that its structure had become wasteful, unwieldy, and worst of all, risk averse. Furthermore, after having invested so heavily in computers, HP executives recognized that the industry was becoming increasingly commoditized. In the opinion of industry observers, the moment had arrived to shake up the company.

After a few attempts to transform the company from within, the HP board chose Carly Fiorina as the new CEO in 1999, an acknowledged high tech "rock star" who recently had headed sales at Lucent, the communications hardware giant that had spun off from the AT&T breakup. From the start, she was a controversial presence in the company. For example, her specialty was marketing, which automatically branded her as an outsider in an engineering company. Moreover, as a media darling, the personal publicity she attracted made many longtime HP executives uncomfortable. However, others argued that she was bringing a fresh perspective on where the company should go, that she could gain an overview that few insiders had and would formulate a new strategic direction. In particular, Fiorina argued that with the unmatched breadth of its product lines, HP might somehow combine them into a more coherent whole, perhaps by focusing on the internet. Nonetheless, this vision of strategic synthesis remained to be defined in detail.

So far so good. This background was extremely useful for me and covers to about 2004. But from this point, Burrows goes into excruciating detail about Fiorina's personality and style as well as adds several chapters on the civil war within the company that the acquisition of Compaq sparked. None of that interested me much, though this is the "intrigue" that many readers found most interesting. Then, the book ends as she obtains the acquisition, well short of the aftermath in which she was fired. So in addition to being too gossipy for me, it is already outdated.

Burrows is a good journalist and covers a lot here in a better way than I have found elsewhere, but it is not very deep and glosses over many of the others issues that Fiorina was concerned about, such as the creation of synergies between the 83 largely independent businesses that make up the company.

Recommended tepidly.