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Time to Revisit Carly Fiorina's Business Record Before HP? Yes, So Let's Begin With Lucent.

Everyone remembers Carly Fiorina as the controversial CEO of Hewlett-Packard. But it was at Lucent Technologies where her public business profile first emerged.

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The presidential campaign of Carly Fiorina, the onetime CEO of the Silicon Valley icon Hewlett-Packard, is back in the news this week for two reasons. First, her poll numbers are improving; and second, she’s been prevented from appearing in the main debate of Republican candidates to be hosted by CNN on Sept. 16.

Fiorina’s campaign has until now been more of a political curiosity than one getting serious attention in political circles. Portraying herself as a political outsider — having never held any elective office — she has argued that her qualifications for office stem from her record in business, not in politics.

That has led to an examination of her history in that arena. It’s been more than 10 years since Fiorina’s last significant job in business as HP’s CEO ended in 2005. She resigned rather than see her authority as CEO diminished as the company’s board had proposed.

But it might be more instructive to begin before that, when Fiorina was president at Lucent Technologies, the former hardware division of AT&T. (Now Alcatel-Lucent, it is in the process of being acquired by Finland’s Nokia.) Fiorina, her official campaign biography tells us, “led the successful spinoff from AT&T of Lucent,” including the $3 billion public offering on the New York Stock exchange that was “at the time the largest IPO in history.” She rose to the position of president of Lucent’s global service provider business in 1997, and was in 1998 named by Fortune Magazine as the “Most Powerful Woman in Business.”

But when you unpack the particulars of that earlier period, a more complicated and troubling picture emerges, especially if one of her arguments — similar to Donald Trump’s — is that her business acumen makes her better qualified to run the government.

Perhaps, as Fiorina’s record at Lucent shows.

At that time, telecommunications equipment companies had entered a period of unprecedented — and as it would later emerge, unsustainable — growth. Congress had passed a law making it easier for new companies to compete with local phone companies, which had long been de facto monopolies. Households and businesses first connecting to the new-fangled Internet added phone lines and equipment and services, creating a gold rush to build up new network capacity around the world.

Lucent burst onto the scene competing with — and often beating — the likes of Cisco Systems, Motorola and Canada’s Nortel in supplying telecom gear to scrappy young companies. It exceeded Wall Street’s expectations immensely and grew like crazy. Sales grew from $23 billion in 1996 to north of $30 billion in 1998 and in that period swung from a $793 million annual loss to a $970 million annual profit.

Much of that growth came as a result of aggressive lending by Lucent to its customers, deals in which Fiorina was knee deep. In her book, in fact, she bragged that she considered herself head of sales. These “vendor financing” arrangements are not unlike the loans you might take out from a car dealer and were a common industry practice. “Network operators,” Lucent told shareholders in a 1998 regulatory filing “increasingly have required their suppliers to arrange or provide long-term financing for them as a condition to obtaining or bidding on infrastructure projects.”

In one case, Lucent extended $2.3 billion to Sprint in order to allow it to buy equipment to build out its wireless network, and said it was “reasonably assured” that the telecom giant would make good on its obligations. As the third-largest long distance company with ambitious plans for a wireless business, Sprint had all the makings of a good credit risk.

Less clear was the rationale the same year for extending $2 billion to Winstar Communications to build out a fixed wireless network. Then, there was in 1999 a $440 million deal to supply equipment on a vendor-financed basis to tiny PathNet, which at the time had less than $2 million in annual revenue. Still, it had talked Lucent into extending it a credit line worth up to $2.1 billion.

As Fortune observed in a 2010 story published when Fiorina was running for California’s U.S. Senate seat, the loan raised PathNet’s debt-to-equity ratio to an irresponsible 8-to-1 before it could even use half of the available credit.

Fiorina would have been keenly aware of these deals. But by the summer of 1999, she was on her way to HP and was at a safe distance when the reckoning came. By 2000, Lucent was on the ropes, having extended nearly $7 billion to customers, even as it continued to make risky vendor loans. Winstar and PathNet were both out of business by 2001.

So, by 2002, Lucent had emerged as one of the enablers of the great Telecom Crash, which eclipsed the bursting of the late-1990s dot-com bubble for its size. Telecommunications companies as a whole had run up $1 trillion in debts, having achieved neither the demand nor the revenue required to come close to covering those obligations.

As Fiorina’s former boss, Lucent’s then-CEO Henry Schacht told Fortune in 2001, after having been forced to cut reported revenue by $679 million in the prior fiscal year: “The single lesson you get out of Lucent is, don’t try to run the business faster than it’s able to run.”

Lucent fell from Wall Street’s good graces quickly. It responded by spinning off numerous units including Avaya (phones) and Agere Systems (chips). By 2003, its shares were trading at about $2 a share, down from a high of $84. It was ultimately acquired by Alcatel in 2006 for $13.4 billion.

Fiorina’s next chapter is much better known. She went on to fame — some say infamy — as the CEO who led HP’s acquisition of Compaq, a deal first announced 14 years ago this week. The impact of that is still being felt on that Silicon Valley stalwart, a move which ultimately led to her undoing.

More on that next.

This article originally appeared on Recode.net.