News & Views from 465 California Street

Babs vs. Carly

Clint Reilly

According to a recent LA Times poll, California’s U.S. Senator Barbara Boxer is still nearly as popular as her counterpart, Dianne Feinstein.

Nevertheless, Boxer will face a tough battle to retain her senate seat next year against former Hewlett Packard executive Cara Carleton “Carly” Fiorina.

Political handicappers have underestimated Fiorina’s chances, due primarily to her choppy performance as an economic adviser to John McCain and her mixed record as HP’s CEO. But there are reasons to believe that a Boxer/Fiorina matchup could be a blockbuster.

Boxer, a three-term incumbent Democrat, may be vulnerable to the electorate’s sour mood and the traditional midterm election backlash against the incumbent president’s party.

Undoubtedly, “Babs” (her nickname used by close friends) will face bruising attacks from Fiorina and her political brain Marty Wilson – a former adviser to Pete Wilson and Arnold Schwarzenegger.

I know Boxer well.  I advised her early races for Supervisor in Marin County and then ran her tough primary campaign for Congress against then San Francisco Supervisor Louise Renne in 1982.

Ten years later, Boxer won a primary campaign for U.S. Senator over Lieutenant Governor Leo McCarthy and Southern California Congressman Mel Levine. The Democratic primary electorate was 55 percent female, and Boxer benefited from her lopsided gender advantage. The two men split a minority of males while she swept the female vote.

Boxer was fortunate to face conservative talk show host Bruce Herschensohn in the general election.  Herschensohn was forced to spend the waning days of the campaign explaining away his frequent visits to a well-known strip club near the Los Angeles airport.

After her victory in 1992, Boxer drew mediocre, under-funded opponents in 1998 and 2004. I have heard Willie Brown frequently describe Boxer as the luckiest politician in the Golden State for this reason.

But Fiorina is neither mediocre nor poor.

She earned tens of millions of dollars during her tenure as CEO of HP, and she left her post with a hefty severance package totaling more than $20 million. So, she has the ability to pop substantial money into her own drive.

What’s more, her advocacy for McCain built ties to national Republicans, corporate elites and Washington insiders whose imprimatur brings credibility and big money.

There’s more.

Fiorina is no stranger to bare knuckled fights. Her cardinal sin at HP was to antagonize the families of revered founders William Hewlett and David Packard by engineering the purchase of Compaq Computer Corporation.

The founding family hired legendary investment banker Tully Friedman to kill the deal, but Fiorina had other plans.

Convinced that the company needed to broaden its business into services and midsized computers, Fiorina refused to back down and soon found herself in the center of a ruthless proxy battle every bit as tense and dirty as any political campaign.

Fiorina didn’t flinch. She campaigned relentlessly among stockholders and won a razor-thin majority that left many hard feelings but demonstrated her ability to triumph over tough opposition.

Eventually, she was forced out after a series of clashes with the board as questions arose about the future of the company. But Fiorina’s basic judgment was proven correct as HP went on to thrive under the leadership of new chief executive Mark Hurd.

Fiorina will almost certainly win her primary election over GOP opponent Chuck DeVore, which will pit her against Boxer in November. We will then be treated to a spirited campaign by two candidates who have proven that they know how to fight and are not afraid to take the gloves off.

Babs versus Carly could prove to be a donnybrook.

Comments (4)

  • A donnybrook? I don’t see it. Who would support someone (Carly) who can run for office just because she is rich but never saw the need to vote and be an active participant in the democratic process? Barbara will make mincemeat out of her because of her voting record, and she deserves it.

    In my opinion, someone who doesn’t vote doesn’t have the credentials to represent us. Carly is an insult to those of us who care enough to go to the polls…regardless of how powerful or busy we are.

    Posted by: sharon guy | November 17th, 2009 at 11:16 am

  • The HP-Compaq merger was poorly executed under Carly’s reign. HP paid a 15% premium to Compaq shareholders to go along, but diluted HP shareholders ownership by 1/3 in the combined firm. When all was said and done, the combined company lost 30% of its market capitalization by the time Carly was fired by the HP Board, and walked away with her $21 million golden parachute.

    To add insult to injury, HP fired thousands of both HP and Compaq employees to make the numbers work: that’s biz-school speak for “synergy.”

    Look up Ram Kumar, the influential analyst at ISS (Institutional Shareholder Services), who wrote a crucial report in favor of the HP-Compaq merger in 2002. His report was critical to sway large institutional shareholders into approving the merger. ISS fired him after it discovered that he didn’t earn the law degree from USC that he claimed. Unfortunately, his deception was not discovered until well after the HP-Compaq proxy fight.

    Also, read the critical articles written by Robert Parish, an investment adviser based in Portland, OR. He wrote several pieces on the undisclosed conflict of interest between ISS & Warburg-Pincus, a key adviser to HP.

    One other factoid: in 2001 while at HP, Carly tried to buy Price Waterhouse Coopers for $18 billion, but canceled the offer when HP figured out it could not support the large-scale compensation structure for PWC consultants, vs. HP’s internal services organization. One year later, in Oct 2002, IBM scooped up PWC for $3.9 billion.

    Clearly, Carly Fiorina’s failures at HP do not qualify her to be a United States Senator. Perhaps she has other qualifications, but I can’t seem to find them.

    Posted by: TomL | November 17th, 2009 at 3:00 pm

  • Carly’s office headquarters at HP was called…The Armani Palace. While there may have been a good fight in Carly, she didn’t appear to be able to gather up much support. Not sure this will serve her well in the campaign. Another business person who turns to politics with a very spotty voting record….impressive?

    Posted by: melinda maginn | November 18th, 2009 at 3:12 pm

  • Now that Tom Campbell has entered the GOP primary we cannot assume that Carly will automatically secure the nomination. Remember a gentleman by the name of Al Checchi—very wealthy and successful with a spotty voting history also—who lost decisively to Gray Davis for governor?

    Tom is liberal on social issues and conservative on economic ones. A dangerous combination should he emerge victorious. He could be the next Senator Brown from the great state of California and send Babs a’packin.

    Posted by: allen pross | January 27th, 2010 at 4:00 pm

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