Fiorina is out, but confusion remains

Corporate reorganisation has been the dominant constant in the past five and a half years at HP. First came the attempted buyout of PricewaterhouseCoopers for $18bn in 2000, in an attempt to better compete with IBM. High-end consulting services -- that was the thing that would boost HP's profits. IBM later grabbed the company for about a third of the price.

Then came the Compaq acquisition of 2001 to 2002. The deal would allow HP to gain heft and better compete with Dell. It would also let HP compete in the lower end of the services market, which HP execs said was actually more attractive than the high-end market they attempted to enter only a year before.

Even at the start of the long acquisition process, HP couldn't resolve the contradictions. Months before the merger was announced, HP executives said buying a PC maker wasn't a good idea. When the Compaq deal was unveiled, HP said Compaq really wasn't a PC maker, though half of the company's revenue came from servers and desktops.

When HP passed Dell in PCs because of the merger, HP trumpeted that it had brought competitiveness back to the marketplace. When Dell surpassed HP and the gap grew, HP claimed that it wasn't really interested in being number one in PCs, anyway. The margins were too low.

Along the way, a painful pattern began to emerge. HP would have a terrible quarter, missing earnings because of a shortfall in one division or another. Fiorina would then vow that heads would roll. Some executives -- voluntarily and involuntarily -- such as Howard Elias, Mary McDowell and Jeff Clarke, would then depart while the company reorganised into new divisions.

Two to three quarters of recovering revenues and profits would return. HP executives and some analysts would declare that the turnaround had begun.

Then a dismal quarter would follow. Layoffs and reorganisations would be announced while a new way to gain higher margins (industrial printing, patent licensing, enterprise servers, a good number two to IBM, a good number two to Dell), would be announced. It was like hearing the reading of the same MBA class project over and over.

There was a cultural dimension to Fiorina's often rocky tenure as well. She came from Lucent Technologies, the AT&T spinoff. Not only was AT&T a giant, but it was the last bastion of feudalism in the Northern Hemisphere. (Ironically, Fiorina majored in medieval history.) The company ran on a rigid hierarchy. Competitive battles were won through financial heft and strength, and a lot of energy was dedicated toward internal company battles.