When last I wrote about HP I responded to Prof Bainbridge’s suggestion that it looked like the board-shakeup at HP taking away some Fiorina power was a sign of hope that boards were asserting themselves. I was skeptical about the board’s ability to manage its way out of a CEO’s mistakes and thought we need stronger medicine.
Eisinger in today's W$J supports that with a harsher story on HP, calling the Compaq takeover a failed deal whose value is about to be written off. Eisinger says the solution is to split off the printer business, which is worth the same as the whole company. While the board took the cosmetic “baby step” of realigning Fiorina’s responsibility, it took “two large strides backward” when it combined its printer business with its pc unit. Instead, it needs to sell the printer business.
As I said, “the only true long-term solution is not to expect monitors to manage, but to reduce the assets under managers' control.” But as I’ve argued (see this post, and the papers linked there), this won’t happen without major restructuring of corporate governance, and a change in the tax laws that encourages distribution rather than retention of earnings.
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