Fiorina making sales, one at a time

By CECILIA KANG

July 12, 2000 Web posted at: 4:03 PM EDT (2003 GMT)

In this story: Persistence pays off Taking the longview RELATED STORIES, SITES

SAN JOSE, California (San Jose Mercury News) -- When Carly Fiorina took over the reins of Hewlett-Packard Co. last July, the former Lucent Technologies Inc. executive was handed a colossal challenge: rejuvenate the aging high-tech behemoth and help it recover the energy and creativity of its youth.

One year later, observers give Fiorina high scores for injecting a much-needed dose of urgency into 61-year-old HP. But it isn't easy to drive a long-time laggard to the head of the pack. Every day, Fiorina must draw on all of her skills as chief marketer and evangelist for Silicon Valley's largest company.

At 11 in the morning Monday, Fiorina stands out in her tan suit among a sea of men in navy blue in the executive conference room at the North San Jose headquarters of Cadence Design Systems Inc.

She and seven other well-prepped executives sit at the center table and quietly study their notes while waiting to start a conference call with journalists and analysts to explain a new partnership between HP and Cadence. Another 13 officials are sitting in rows against one wall.

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Fiorina views the five-year alliance as a major victory, opening the door for HP to sell its wares to Cadence's customers, who need powerful computers to run Cadence's sophisticated software for designing chips and circuits.

When Fiorina arrived at HP, one of the first things she did was call the heads of the leading companies in every industry. Her question to all of them: what can HP do to win your business?

For Cadence, the answer was: not much. The company was perfectly happy with Sun Microsystems Inc., HP's archrival in the market for heavy-duty computers and workstations. And Cadence's customers were pretty content, too -- four out of five of them bought Sun machines to run the Cadence software.

Fiorina wasn't satisfied, and after a year of discussions, the two companies reached a deal: Cadence will use and promote HP servers and workstations, and HP will use Cadence software for its own design work.

``This is evidence of our commitment to the ... industry and strengthens our ability to serve that industry well,'' Fiorina tells the 21 inquisitors on the other end of the conference call.

Despite pointed questions from her telephonic audience, Fiorina refuses to discuss the financial details of the partnership, which analysts later say is too fuzzy to value.

But Wall Street is only part of Fiorina's audience. Half an hour into the call, aides yank Fiorina and Cadence CEO Ray Bingham out of the room to give a live interview to financial news channel CNBC. They repeat to television viewers the same message they gave to analysts just a few minutes earlier.

After the interview, Fiorina rushes to the other side of Cadence's campus to do the same routine all over again for 1,600 Cadence engineers and salespeople.

Speaking to the packed audience in a massive white tent set up for the occasion, Fiorina adopts a more casual demeanor. Cadence has turned the event into a barbecue, and the crowd is in typical Silicon Valley uniform: khakis and T-shirts.

Fiorina and Bingham know that to make their new partnership work, they have to win over Cadence's large engineering staff, which is being asked to switch to a technology that is scarcely used in the electronic design market.

Politely, an engineer asks the question on everyone's mind: ``This sounds good, but how does this relate to Sun?''

The crowd applauds. Fiorina turns to her counterpart and tries to pass the hot potato. ``What about Sun, Ray?''

Laughter fills the tent.

Bingham slams back, ``I bet you have opinions on that subject yourself.'' More laughter.

Fiorina says HP's machines are faster and more reliable than Sun's. But the Stanford medieval history grad is no engineer, and she focuses on her marketing message: The alliance is non-exclusive, she says. Cadence's customers will simply have another choice: HP.

``Some of you may be saying, `Gee, what we're doing works. Why should we make changes now?''' she continues.

She answers with a quote from Charles Darwin, famed for his theory of evolution: ``It is not the strongest of the species that survives nor the most intelligent. It is those most adaptive to change.''

``The companies that thrive and survive over time are those who can see a trend and respond,'' Fiorina concludes. Her unspoken coda: HP will be one of the companies that thrive.

The audience responds with applause and some cheering.

And then Fiorina and Bingham duck out.

Meeting with a reporter immediately afterwards, Fiorina and Bingham say that the day, a year in the making, was a success.

How did Fiorina convince Bingham to support HP when his engineers were clearly questioning the move?

According to Bingham, he was attracted by Fiorina's persistence and her desire to establish a stronger strategic partnership, not just sell more boxes.

``She reached out to make a difference,'' Bingham said.

Fiorina uses the word ``relationship'' a lot when talking about the new HP. The company has struck partnerships with everyone from dot-com start-ups to Ford Motor Co. and Delta Air Lines Inc.

While the partnerships may not result in large profits right off, analysts say HP will benefit from the lasting relationships as its customers grow.

That strategy is what Fiorina thinks will ultimately put HP ahead of competitors like Sun.

One of Fiorina's biggest trophies is its recent deal with Seattle-based Amazon.com, which agreed to use HP's products for as much as 90 percent of its server needs -- displacing existing machines supplied by Sun and Compaq Computer Corp. The agreement also calls for HP to offer more products, including its popular printers, through Amazon's online electronics retail store.

Although HP is gaining ground in server sales, according to market research firm IDC, Sun doesn't seem too worried. John McGuigan, a Sun manager, says the HP-Cadence alliance isn't as beneficial to HP as it appears. Besides, he adds, ``customers love Sun, and whether they're going to switch because of this, I don't know.''

Goldman Sachs analyst Laura Conigliaro says the Amazon deal illustrates Fiorina's ability to look at a customer's overall needs and see how HP, from its various units, can supply those needs. HP offered its personal computers and printers along with its Unix servers, a package that Sun -- which is focused on large computers for corporations -- couldn't match.

``HP needed a heavy dose of sales and marketing and they couldn't have come up with a heavier dose than with Carly,'' Conigliaro says. ``She's made a lot of progress under a set of very difficult circumstances.''

Fiorina says she's pleased with what she's accomplished so far. ``But I'm also never satisfied.''

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