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Are Hewlett-Packard's Glory Days Over?


In "Carly's challenge" (Cover Story, Dec. 13), you've forgotten one of the main points of contention about the acquisition of Compaq: Many were distressed by the absorption of a commodity technology company, because it strayed from Hewlett-Packard Co.'s (HPQ) long tradition of market-opening technical innovation. Now, HP is pumping up profits by, among other moves, reducing its research and development expenditures (your article says by taking advantage of "redundancies," whatever that means) in the pursuit of new ideas. The drama is playing out as many had expected: HP is groping about for "synergies" based on management moves and determined sales efforts, while the last harvest of the old, bold HP -- the printer business -- is steadily consumed.

William W. McMillan

Ypsilanti, Mich.

Carleton S. Fiorina needs to rid HP of the unprofitable detritus that it has accumulated over the years. Taking a page from IBM's (IBM) strategy guide and shifting to a service-heavy stance are the way to survival and shareholder satisfaction. Among others, the storage division, the cutthroat PC division, and the VMS division are prime candidates for rationalization.

Israel Thomas

Sydney

It's not good news when an $80 billion "technology" company makes the majority of its profit from ink-jet cartridges. It's an $80 billion office-supplies company. The unique culture is gone along with the "technology."

John Sullivan

Granite Bay, Calif.

It seems to me that it's not only time to review HP's broad strategy and its inability to execute but also to consider replacing Fiorina, the inspiring speaker, with someone with a proven track record in operations and execution. Five years is a long enough trial to drive change and improve performance. We only give the President of the U.S. four years.

Bill Dieterich

Fort Collins, Colo.

Carly Fiorina could use a few good Marines. Your story about the value that citizen soldiers bring to business ("Served in Iraq? Come work for us," Working Life, Dec. 13) made me think that HP could use some reinforcements. Carly's option to "stay the course" is made tough by a failure in teamwork -- her divisions can't get it together.

This Marine says: Kill friction with competition. Don't worry about end-to-end deals using all HP products and services. Instead, set up the best deal for the customer -- put HP divisions in open competition with all rivals. This free-market competition will give the customer the best deal and naturally drive all HP divisions to greater efficiency.

If the business division heads can't handle competition, fire them and round up a couple of Marines.

John Ledoux

Jacksonville, N.C.

From Jan. 1, 1999, to today, American International Group Inc. (AIG) has delivered a total return to shareholders almost five times as great as the Standard & Poor's 500-stock index (29.3% vs. 5.8%), hardly a "disappointing performance" ("Quit while you're ahead, Hank," News: Analysis & Commentary, Dec. 13). While short-term speculators who trade pieces of paper back and forth may be unhappy with AIG's recent stock performance, long-term investors can only be grateful to CEO Hank Greenberg.

During that same period of time, AIG's earnings per share grew from $2.34 to an estimated $4.40 this year, shareholder's equity from $39 billion to approximately $80 billion, and market capitalization from $101 billion to $180 billion. Oh, and the company also weathered the terrorist attacks of September 11, a recession, and four Florida hurricanes, all while maintaining an AAA balance sheet. So, what's this about AIG needing a "shakeup"?

Shelby M.C. Davis

Chairman Emeritus

Davis Advisors

New York

"Shaking up trade theory" (Special Report, "The China Price," Dec. 6) offered scary anecdotes and factoids, tenuously suggesting that trade theorists may soon abandon the free-trade paradigm. No economy has ever grown or prospered by walling itself off from competition.

Management guru Peter Drucker says cheap foreign labor has less influence on America's ability to compete globally than do our domestic costs for taxes, regulation, health care, energy and, especially, litigation. We must control these costs, strengthen and make permanent our R&D tax credit, and better develop our math and science teachers so they can properly connect today's students with tomorrow's high-tech career opportunities.

We also must invest in older workers' adjustments to changing skill demands and insist that our trading partners play by established global rules. But we'll foolishly jeopardize both domestic and international growth if we try to isolate our economy from the rest of the world.

Frank Vargo

Vice-President for

International Economic Affairs

National Association of Manufacturers

Washington

In "The top givers" (Special Report, Nov. 29), you unfairly and incorrectly ascribe base motives to Newmont Mining Corp.'s (NEM) philanthropic activities, particularly in Indonesia. For the record, Newmont has been engaged in extensive community development programs in Indonesia for the past 10 years. This activity includes building roads, bridges, schools, sports facilities, libraries, and health centers, among other things. We work closely with the local government authorities, various nongovernmental organizations, and other international entities to coordinate and implement these projects and programs. For BusinessWeek to label our ongoing and thoroughgoing community-development efforts as "greenwashing" misrepresents what is, in fact, exemplary corporate citizenship.

Chris Anderson

Group Executive for

External Relations & Social Responsibility

Newmont Mining Corp.

Denver

As a medical informatics specialist (combining medicine with postdoctoral-level information science and computing training), as well as a former Merck & Co. (MRK) manager, I view the Vioxx controversy with concern ("How to prevent another Vioxx," News: Analysis & Commentary, Dec. 13). Post-marketing surveillance programs fail to produce any data at all if the practitioner does not realize a problem may be due to a drug -- and this is likely the situation in a majority of cases.

The Food & Drug Administration's moves to improve the way it responds to risks from medical products, including better "data-mining," is a step in the right direction. My concern is that overconfidence in such initiatives may dilute the resolve needed for the fundamental and daunting task of implementing comprehensive electronic medical record (EMR) systems in clinical settings that could provide a solution to long-term postmarketing drug follow-up.

Scot M. Silverstein, M.D.

Lansdale, Pa.


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