Losing the HP way.

The article focuses on Carly Fiorina, the chief executive of Hewlett-Packard (HP). In 2002, she pulled off one of the most controversial mergers ever, of HP and Compaq, over the bitter opposition of Walter Hewlett, a son of one of HP's founders, and despite a cliff-hanging 49% of HP's shareholders voting against it. Her problem ever since has been to justify the beast she thereby created. HP's shares are worth less today than on the day before the merger was announced or on the day it closed. A consensus has emerged in the industry that the new HP, the tech industry's most sprawling conglomerate, has lost its focus and is being squeezed between two formidable rivals with much clearer business models, Dell and IBM. HP announced on August 12th that its profit for the latest quarter, at $846m, was less than a year earlier and far below what Wall Street had been expecting. Ms Fiorina reacted by giving another glimpse of her tough side, firing three top executives on the spot, and stubbornly sticking with her strategy. In each area, it turns out, HP is fighting separate wars against different and fiercely focused competitors--EMC in storage hardware, Veritas in storage software, StorageTek in tape drives, Sun Microsystems in Unix servers, IBM in consulting services, and so on. Steven Milunovich, an influential analyst at Merrill Lynch, argues that Ms Fiorina's best option is to address the "conglomerate discount" in HP's share price--in other words, to break up her company.