Wednesday, October 7, 2015

WSJ and Robert McMillan--new material, same worn-out untruths

Well written, but McMillan cites 'the facts' without considering the 'right dates':  "H-P’s stock price fell 55% on Ms. Fiorina’s watch, more than peers in the technology industry, even those hammered by the 2001 downturn. Dell Inc.’s stock dropped 5% over the same period; Cisco Systems Inc.’s fell 45%; IBM dropped 31%. The Nasdaq Composite Index fell by 27%.  Our numbers come up differently--I keep wondering "what was Carly's watch" when they write this.  We use (as described in earlier posts) her start date--June 19, 1999--and end date--February 7, 2005. for one set of calculations.  We use November 1, 1999 to October 31, 2005 as "her momentum play" as described herein also.   The third way--start her on November 1, 1999 (give Lew Platt the final 1999 quarter with the Agilent divestiture), and take it to either Feb 7 or Oct 31, 2005.  
       Doing that gives HP at -46%, and -24%; IBM at +1%, --12%; Cisco at -46%, and also -46%; and Dell +7%, -26%.  So, really depends on WHEN you date the numbers to.

Ms. Fiorina declined to be interviewed for this article. Her press secretary, Anna Epstein,said Ms. Fiorina’s tenure coincided with an economic downturn that hurt many companies: “As of Oct. 31, 2001—after the height of the dot-com bust—H-P had over 86,000 employees world-wide. Carly’s leadership saved H-P, and those jobs, during the worst technology recession in the last 25 years.”
Ms. Fiorina indeed saved jobs by keeping H-P afloat, but had to trim the company’s workforce by about 30,000. Dell, about a third the size of H-P in 2005, cut roughly 1,700 jobs during the same period, according to people familiar with the matter."  See the next blog post re Dell
McMillan did find Carly's immediate replacement, CFO Bob Wayman, who claimed--correctly in my view--that Carly's work paved the way for Hurd's success re Dell.  Left out of all of these discussions is the fact that Dell had to file for redemption with the Feds for falsifying their 2003 and 2004 sales and profit data--factoids that certainly helped keep their stock prices afloat, and rising faster than HP.   From news stories at the time: Dell said it would restate annual and quarterly results for its 2003, 2004, 2005 and 2006 fiscal years, as well as the first quarter of fiscal 2007. Dell said fiscal year 2003's first quarter, which ended in May 2002, and fiscal 2004's second quarter, ended in August 2003, would be hit hardest, with net income and earnings a share falling 10% to 13%.
Here's one response to McMillan's article (out of 232 the first day)" Jay Jeckyl

If you chart the growth of HP from the point months prior to her dismissal and the following next 2-3 years, you'll see what's called "setting the table".  She did for her replacement what Reagan and Bush did for Clinton.  They worked hard at "setting the table".  Her best work was after the BOD dismissed her and thus made a big mistake.  Look it over.  The numbers don't lie.

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