Carly Fiorina was challenged on her record as chief executive of Hewlett-Packard, and she responded by touting her leadership of the company.
“We doubled the size of the company, we quadrupled its top-line growth rate, we quadrupled its cash flow, we tripled its rate of innovation,” Ms. Fiorina said, before acknowledging that job cuts were enacted. “Some tough calls are going to be required,” she said.
Donald J. Trump retorted that, “When Carly says the revenues went up, that’s because she bought Compaq, it was a terrible deal, and it really led to the destruction of the company.”
“Destruction” is probably too strong a term, but it is true that Ms. Fiorina emphasized metrics of success that captured less her success at leading Hewlett-Packard and more the fact that she acquired a much larger competitor.
Almost by definition, if a company acquires a very large competitor, it will increase its size, revenue, and cash flow, which indeed happened when Hewlett-Packard bought Compaq under her leadership in 2002.
She didn’t specify how she was measuring the rate of innovation, but the rate of new patents (one such measure) would typically rise too after absorbing another large company’s research department.
But as Mr. Trump implied, those facts alone don’t explain whether an acquisition was a strategically smart one, and as he suggests. And in fact, many analysts view the merger, her defining action as C.E.O., as ill-advised.