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Fiorina has quieted some of those she calls her "cynics and doubters," who had whispered that a woman with a marketing background was not fit to run HP. But she still faces formidable challenges, starting with generating profits in PCs and corporate "enterprise systems" at her newly merged company, which posted $35 billion in revenues in its first six months. Can she go from being a Churchillian leader, adept at giving a "We will never surrender" speech, to being more of a Lou Gerstner, IBM's former CEO, who was able not only to slash costs and jettison unpromising lines...
...Since HP's president, Michael Capellas, a respected operations manager and Compaq's last CEO, quit to run WorldCom in mid-November, Fiorina must now take full responsibility for HP's bottom line at a time when she must parry new threats from IBM and Dell. Both have spent the past year bulking up major parts of their businesses, while HP has been on a low-cal diet, trying to restore its flabby enterprises to health. As analyst Bill Shope of J.P. Morgan Chase puts it, "IBM is trying to squeeze HP at the upper end of the market, while...
Fiorina's supporters think HP in the middle will be a hit show. The rationale for acquiring Compaq has not changed, they argue. By buying Compaq's vast product portfolio, R.-and-D. muscle, direct-sales channel and 34,000 tech-service pros, HP could thwart IBM and Dell. "Analysts are waiting for us to put points on the scoreboard," says Michael Winkler, Fiorina's executive vice president for operations. (Fiorina declined to be interviewed...
...terms of cost cutting, those points are accumulating. HP has shuttered nine assembly plants, cut 12,500 jobs and "rationalized" its product offerings, reducing them to 65,000 from 85,000. Result: $650 million in savings since the merger, which helped HP offset losses in its divisions that make PCs and enterprise-computing gear. "I'm keeping my shares," says Ben Rosen, Compaq's former chairman and a large shareholder. "HP is going to get so lean that earnings surprises will be on the upside...
...believer. As chief information officer for Crossmark, a sales-and marketing-support firm based in Dallas, Orndorff spends the bulk of his $15 million IT budget on tech support for Compaq handheld devices, PCs, servers and storage networks. "Dell approached me," he says, "but all my engineers are HP certified, and adding brands with other certification requirements for a slightly lower price on the hardware wasn't compelling enough...