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Fiorina's fall

Why is the first woman to hold the titles of president, CEO, and chairman of a major computer company-all at the same time-now looking for work?

In the high-tech business world, Carly Fiorina is one of the biggest stars. So why is the first woman to hold the titles of president, CEO, and chairman of a major computer company-all at the same time-now looking for work?

Board members at San Francisco-based Hewlett-Packard Co., where Ms. Fiorina had reigned for six years before being forced to resign on Feb. 9, said she failed to execute a strategy of slashing costs and boosting revenue as quickly as the directors had hoped. A key part of the problem was the company's lackluster performance after Ms. Fiorina led the charge of HP's hotly debated $19 billion merger with Compaq in 2002.

Industry analysts, though, say other issues may have played a role in HP's decision to fire the woman whom Fortune magazine named the nation's most powerful from 1998 to 2004.

The outsider theory: Ms. Fiorina, a former executive at Lucent Technologies and AT&T, was hired to change the atmosphere at HP. She began by slashing 18,000 jobs, merging 83 business units into less than a dozen, and firing three vice presidents at a 5 a.m. meeting when she learned HP would fall short of its expected quarterly profit.

"She's unwilling to let anyone slide into a comfort zone," said Carl Claunch, vice president of research at Stamford, Conn.-based Gartner Inc. "She made employees uncomfortable because it was obvious she had no room for slackers."

The Benedict Arnold theory: Following the dot-com crash, Ms. Fiorina stated that the technology sector could no longer deliver the profits of an emerging industry.

"Carly was the only senior executive in the computer business who consistently appeared in public and said it's no longer a growth industry," said Mark Stahlman, a Caris & Co. analyst.

She then urged the Bush administration against limiting the ability of U.S. companies to ship jobs abroad, telling Congress, "There is no job that is America's God-given right anymore. We have to compete for jobs."

The paparazzi theory: While other high-tech executives like rival IBM CEO Samuel J. Palmisano were keeping a low profile, Ms. Fiorina was making keynote speeches on Capitol Hill, testifying before Congress, and serving as an adviser to new California Gov. Arnold Schwarzenegger.

"She was spending more time in front of a video camera than she was with her people," said Warren Bennis, founding chairman of the Leadership Institute at the University of Southern California.

This theory was the only one addressed by HP's board. "Carly was brought in to catalyze a transformation of HP," said new nonexecutive chairman Patricia C. Dunn. "She did that in a remarkable fashion, and she executed the merger with her management team in a superior fashion. Looking forward, we think the job is very reliant on hands-on execution, and we thought a new set of capabilities was called for."

Balance Sheet

· The dominoes appear ready to topple again in the ever-narrowing telecommunications field. Industry leader Verizon is set to buy MCI for $6.7 billion, winning a bidding war with Qwest Communications. Qwest and MCI began discussing a merger six months ago, but Verizon entered the picture in recent weeks following the sale of AT&T to SBC Communications and Sprint's acquisition of Nextel Communications.

· In an attempt to thwart a merger of Hollywood Entertainment and Movie Gallery, video store giant Blockbuster has begun a hostile takeover bid, giving Hollywood shareholders until March 11 to decide whether to sell their shares to Dallas-based Blockbuster, the nation's largest video retailer with about 9,000 stores worldwide. A Hollywood and Movie Gallery merger would create a combined video chain of only 4,500 stores.

· Faced with the prospect of having to buy another struggling automobile line, General Motors opted to pay $2 billion to Italian automaker Fiat SpA to dissolve a five-year partnership between the two companies. Under the agreement, the two carmakers will dismantle their joint venture that manufactures engines and transmissions. The companies will continue to cooperate on engine production, development of vehicle programs, and other fields.

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Business

Money makers

Alan Greenspan and the Federal Reserve raise interest rates again

Ever wonder what it would be like to hold the key to the entire U.S. money supply?

That's the role Federal Reserve Chairman Alan Greenspan and his colleagues share as members of the Federal Open Market Committee, the group that sets the nation's monetary policy.

Associated Press writer Jeannine Aversa recently detailed the inner workings of the committee, which boosted short-term interest rates to 2.5 percent last week, the sixth increase since June.

Ms. Aversa said the core of each meeting is two staff presentations. In the first, regional Federal Reserve Bank presidents provide an economic outlook and forecast for their areas. That presentation is followed by a discussion of monetary policy options-raising, lowering, or holding interest rates and the rationale for each.

This is where Mr. Greenspan takes the lead, offering his view of the outlook and his recommendation on interest rates. Other Fed members then have an opportunity to present their views. The discussion is followed by a vote in which Mr. Greenspan goes first, followed by the committee's vice chairman, and then the rest of the voting members in alphabetical order.

The ultimate goal of the group is to find a neutral point where interest rates neither trigger inflation nor create a recession.

Up in smoke

Smoking has always meant big money for the tobacco industry. But these days, instead of cashing in, the industry is paying out huge sums in the way of jury verdicts.

A Missouri jury last week awarded the family of a woman who smoked Kool cigarettes for nearly 50 years more than $20 million in a wrongful death lawsuit against Kool maker Brown & Williamson.

That decision follows an October verdict in Los Angeles where a jury ordered Philip Morris to pay $28 billion to a 45-year smoker with lung cancer. A judge later slashed the award to $28 million.

Meanwhile, San Francisco is on the verge of enacting a ban prohibiting smoking in all city-owned parks, public plazas, and sports facilities except golf courses. And in North Carolina, the nation's largest tobacco-growing state, state lawmakers have banned smoking in both chambers.

Six years ago the tobacco industry agreed to a $246 billion settlement with the states to help pay the cost for treating sick smokers. Now, the federal government wants to hold cigarette makers accountable for decades of alleged deceit. A $280 billion lawsuit filed by the Justice Department contends that the tobacco industry knew the health dangers of smoking but hid that information from the public.

Balance Sheet

· Mexico's major source of income comes from oil, but did you know that the next biggest source comes from Mexican citizens living and working in the United States? Last year, Mexicans living north of the border sent $16.6 billion to their homeland, an increase of 24 percent over 2003. Mexican officials say about 25 million people of Mexican origin live in the United States, about 10 million of whom were born in Mexico.

· The growing Hispanic market is also catching the eye of marketers. Meredith Corp., publisher of Better Homes and Gardens and Ladies' Home Journal, will launch a new magazine aimed at Hispanic women next fall. Meredith officials say census figures show that within the next decade one in five new homeowners will be Hispanic.

· To the dismay of Democratic Party leaders, President Bush ended his first term in office with a net gain of 119,000 jobs. During the latest presidential campaign, many leading Democrats had warned voters that Bush would be the first president since Herbert Hoover to have a net loss of jobs on his watch. Instead, the nation added 2.2 million jobs last year.

· Sometimes less is more. A year ago, Time Warner dumped Warner Music Group after that division lost more than $466 million. So when the world's largest media company announced its latest financials, earnings were nearly doubled despite just a small increase in revenue.

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Business

Deal week

Proctor & Gamble's $57 billion deal to buy Gillette should give the new company greater clout against mass-market retailers like Wal-Mart, analysts say

Headlining business pages across the nation this past week were the mega-mergers of some of the nation's largest companies.

Leading the way was Proctor & Gamble's $57 billion deal to buy Gillette. With combined revenues of more than $60 billion, analysts say the new company would have greater clout against mass-market retailers like Wal-Mart.

Proctor & Gamble, already the nation's largest producer of household products, would add Gillette's Duracell battery, Right Guard deodorant, and line of razors to its collection of more than 300 consumer brands.

Also announced last week was SBC Communications' $16 billion plan to acquire AT&T. Ironically, San Antonio-based SBC was one of the seven regional providers created by the breakup of AT&T's telephone service monopoly by federal regulators in 1984.

Today, SBC is the nation's second-biggest regional phone company, with about 50 million local-telephone customers. In addition, SBC owns a stake in Cingular Wireless, the nation's largest wireless carrier with more than 49 million subscribers.

The deals follow on the heels of two other deals last month when Johnson & Johnson agreed to buy Guidant Corp. for $25 billion, and cell-phone giant Sprint Corp. agreed to buy Nextel Communications Inc. for $35 billion.

Price pump

The rising fuel costs that burdened U.S. companies and consumers alike throughout much of last year continue to cause consternation in 2005.

With the price of gasoline and utility fuel bills holding steady, the cost of other petroleum-based products is going up. For example, carpet, fertilizer, paint, polyester, and plastic toys have become more expensive to make, wrap, and ship. That's leading companies to charge more for these and other products.

"As long as the economy stays strong and the basic commodities prices stay very high, products made from these commodities are probably going to increase in price," said Bill Jewell, vice president for energy at Houston-based Dow Chemical Co.

But there is a bright side for those who have hedged their bets on the high price at the pumps by purchasing stock in oil producers. In the past few weeks, many of these companies have posted huge year-end revenue gains, sending stock prices higher.

For example, ChevronTexaco recently completed the most profitable year in the company's 125-year history, posting revenue of $155.3 billion, up from $121.3 billion in 2003.

ConocoPhillips also posted more than a $30 billion rise in revenue. The company earned $136.9 billion in 2004 after posting $105.1 billion in revenue a year ago.

Balance Sheet

· Lee Enterprises Inc. will buy Pulitzer Inc.-publisher of the St. Louis Post-Dispatch, the Arizona Daily Star, and a dozen other daily newspapers-in a $1.46 billion deal that Lee said would make it the nation's fourth-largest newspaper publisher.

· At least a half-dozen Chinese airlines have agreed to order 60 of Boeing's new 787 jetliners in a deal that could be worth as much as $7.2 billion.

· The U.S. economy finished 2004 with its best performance in five years as the gross domestic product rose 4.4 percent last year. That marked the strongest showing since a 4.5 percent gain in 1999. The U.S. GDP growth was higher than that of the United Kingdom (3.1 percent), but fell short of the 6.9 percent rise in Russia.

· Car lots may no longer be the domain of toupéed men. Women own nearly 7 percent of the nation's franchised new vehicle dealerships, reports CNW Marketing Research. And industry statistics show women have a say in roughly 80 percent of all vehicle purchases.

· General Motors Corp., the world's largest automaker, plans to put two safety features-OnStar in-vehicle communications service and electronic stability control-in all of its vehicles by the end of 2010.

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