Amidst a series of profiles in the major dailies that portray Meg Whitman and Carly Fiorina as tough-minded, successful businesswomen, comes a couple of long-awaited effort to expose what really happened under their tenures at eBay and HP respectively. Whitman and her personally enriching but appalling corporate helmsmanship get it especially bad.
But she’s a billionaire! How could she possibly have been a bad CEO? The eXiled explains:
Whitman’s fabled $1 billion in wealth was acquired in the first few months of her tenure, well before she could muck the company’s bottom line up. That billion-plus that eBay’s directors handed Whitman was perhaps the easiest billion anyone has ever been handed in corporate history: eBay hired Whitman in March 1998, when the company was already the tech world’s darling. Just six months after she joined, eBay went public, making Meg Whitman an overnight billionaire thanks to stock options that allowed her to buy eBay stock at just 7 cents a share, and sell them on the market for as high as $170 per share.
While her timing may have been good, her leadership drove eBay’s stock prices into the tank thanks to her $4.1 billion acquisition of the Internet phone company Skype:
Whitman signed on the dotted line and plunked down $4.1 billions, she did not buy the technology that made Skype work, but instead leased it from Skype’s original creators–who were under no obligation to continue the lease.
But by October 7, 2007, investors were already getting fed up with Whitman’s helmsmanship. This was the high-point of the last bull market bubble, and yet eBay’s stock on this day was slightly lower than where it was in September 2005, when the Skype deal was first announced. Meanwhile, eBay’s biggest competitor, Amazon.com, saw its stock price soar 122 percent over the same two-year period as Amazon made smart investments and wooed clients and customers away from eBay in droves.
The full extent of Whitman’s wasteful $4 billion acquisition only became clear last year, when the real company that owned Skype’s technology, a shady firm called Joltid, decided to stop letting eBay play with its technology. Guess who owned Joltid? The same guys who once owned Skype before selling it (sans Skype technology) to Whitman for $4 billion. Investors were shocked — and eBay’s stock plummeted on the news to near penny-stock status. eBay informed the SEC that if the matter wasn’t resolved (i.e. if Joltid wouldn’t agree to lease them the Skype technology that Whitman forgot to include in the $4 billion purchase), then, in eBay’s own words, “Skype would be adversely affected and the continued operation of Skype’s business as currently conducted would likely not be possible.” In other words, Meg Whitman spent $4.1 billion of eBay’s money to buy literally nothing.
And that’s just the beginning. Read the rest of the piece to find out about Whitman’s entire career of corporate mis-adventures.
Rather than the team-oriented approach that had characterized HP since its founding, Fiorina instituted a top-down culture. She got herself on the covers of glossy magazines. Most good CEOs put employees, shareholders and customers ahead of themselves. Fiorina appeared to put herself first. While she asked employees to make sacrifices – including giving up their profit-sharing plan – she took more than $100 million in pay and perks.
She pursued a growth-at-all-costs strategy, which culminated in the merger with Compaq that sparked a divisive fight over the legacy of the HP Way.
What were the results? During her time at HP, shareholders were disappointed by the company’s poor stock performance. Employee morale plummeted. Independent management experts and multiple publications have dubbed her one of the worst CEOs of all time. Even Wall Street celebrated when Fiorina was fired, sending HP’s stock up. What does it say that HP was worth billions of dollars more with Fiorina gone?
It says what every newspaper in America should be reporting about every CEO that runs for office–in the past 30 years the recipe for CEO success has been to lay off their company’s workforce, ship operations overseas or to Mexico and then cash in for millions of dollars, typically leaving the company in ruins. Jack Welch perfected the technique with GE and it’s been happening ever since. This is a recipe for personal enrichment, not for public office.