Carly Fiorina’s Reasons for Not Breaking Up HP Are the Same as Meg Whitman’s (Video)
The Hewlett-Packard-Is-Breaking-Up meme — reignited earlier this week by confirmation of rival Dell’s announcement that it will go private in a $24.4 billion leveraged buyout, combined with a heavily-hedged report in Quartz that the HP board is “studying a breakup” as well as other options for the company, such as keeping it together (duh!) — refuses to die.
As we’ve reported numerous times, HP isn’t planning on breaking up, even though there are many voices out there arguing that it should. CEO Meg Whitman continues to assert that the company is better in one piece than in pieces, and has reiterated that point numerous times. All indications are that the board, for now, supports her in this.
The reasons are pretty simple: HP is stronger in one big piece than it is in pieces. Being big gives HP a lot of leverage with the many companies it buys parts and components from, including Intel and Seagate, as well as manufacturing partners like Foxconn. Plus, despite the overall decline in the state of the PC business, the return on invested capital is strong enough to make staying in the business attractive. This is why Whitman cancelled a plan to spin off HP’s PC unit not long after taking the helm in 2011.
So when former HP CEO Carly Fiorina took to CNBC yesterday, the first thing she was asked about was her thoughts on a breakup. As the CEO best known for making HP significantly bigger with the huge and controversial 2002 acquisition of Compaq Computer, she conceded that there was a time during her stint as CEO that the board considered a breakup, along with other strategic alternatives. (Again, duh!)
The reasons the board didn’t go for a breakup then sound a great deal like the reasons that the current HP isn’t going for a breakup now. Watch: