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updated 2/9/2005 2:35:20 PM ET 2005-02-09T19:35:20
COMMENTARY

The Carly Critics are coming out in full force, hooting and hollering over the untimely downfall of celebrity Chief Executive Carlton S. Fiorina of Hewlett-Packard. But they may yet get their comeuppance. Carly wasn't H-P's real problem, and had this bareknuckled outsider never come to this faltering giant it would be in far worse shape. And now that she is out, H-P could face a vastly altered future.

Two possibilities loom: Chop it up into pieces; or sell to Dell.

Carly became the brass hat we love to hate, now that Jack Welch, Dick Grasso, Dennis Kozlowski and Bernie Ebbers have left the corporate suite. “Leadership is a performance,” she told Forbes in a cover story months after she arrived in 1999, and her penchant for showy stagecraft riled legions of detractors. My cell rang at 9:46 this morning with a call from the first gloater of the day. “Just wanted to say — I told you so. I told you Carly would screw up that company.” He was enjoying this a little too much, somehow, and already had begun feasting on teensy rumors that Dell Computer might step in and buy H-P on the cheap.

Carly lived by the headline, and now she dies on deadline, ousted from the company she was trying to rescue. H-P, a bastion of old-line Silicon Valley, was sleepy and self-satisfied before Carly came in. She delivered an urgent, dire warning that angered longtime H-P insiders, and yet she was right. This tech giant faces intractable ills fed by forces it cannot stop — the commodization of hardware, a revolt by corporate customers, the rise of Dell, the software monopoly of Microsoft and the omnipresence of the Internet. At H-P, the server business has thin margins and is dominated by Dell; the storage business has thin margins and is dominated by EMC; the services business has thinning margins and, um, is dominated by IBM. Only in printers does H-P really rock. (MSNBC is a Microsoft-NBC joint venture.)

Yet in disposing of Carly, the H-P board hasn't fixed any of these overarching problems. Wall Street took an unkind view of the Compaq merger that Carly Fiorina engineered; she had cited the services business as a prime motivator, in which case she should have bought EDS instead. But the Compaq deal did serve an unstated but central purpose she had in mind: It injected Compaq's higher-energy, more aggressive DNA into this sleepy, slow-thinking giant.

One big worry now is that H-P might lapse back into the almost smug, overly contented behemoth it had become before the arrival of Carly six years ago. For the board, hiring another outsider would be one way to avoid this fate. But you have to wonder whether it has any appetite for another blunt-spoken, driven and urgent stranger to come in and shake up the ranks at H-P. Yet only a true outsider can envision the unimaginable options that H-P should now be weighing.

Options such as: Focus on the printer business and sell servers to Dell, sell storage to EMC and peddle the services unit to EDS. Or chop up the whole empire and spin it off into new publicly held businesses. Or, heck, just take the easy way out: Sell the entire operation to Dell and disappear into the one clear winner in this tough business.

No doubt Carly Fiorina, had she bowed to the board and stuck around to do business its way, would have resisted such drastic and draconian options. The next chief executive of Hewlett-Packard may not have that luxury.

© 2012 Forbes.com

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