Power Sheet – September 21, 2015


A new CNN poll released yesterday shows that Carly Fiorina has surged in the rankings since her impressive performance in the Republican candidates’ debate Wednesday evening. She had 2% to 4% support pre-debate and now has about 15%, taking virtually all of the increase from the two leaders, Donald Trump and Ben Carson. Trump’s support plunged from around 30% pre-debate to 24% in the new poll, and Carson is now a point behind Fiorina.

Produced by Ryan Derousseau

The snowballing trend is voters’ growing contempt for politicians. A troika now tops the Republican race, with over 50% combined support, and they’re the only three candidates who have never held elective office.

The new issue is Fiorina’s record as Hewlett-Packard’s CEO, the centerpiece of her case for why she’d be a good president. That record will now attract much closer scrutiny than it has received so far. Here’s how to sort out what we’ll be hearing.

Fiorina argues her case clearly and strongly. She says that what she did at HP was “double its revenues to $90 billion, triple its rate of innovation to 11 patents a day, and go from a laggard to a leader in every product category and every market segment in which we competed.” She also boasts of doubling employment. And much of that is true.

The many, many people who believe she was a disastrous CEO – and that group would include me – observe that she doubled revenue and employment simply by buying a large company, Compaq, in a deal that was a huge loser for HP shareholders. Her claim of going “from a laggard to a leader in every product category” is distinctly odd, since HP was already the overwhelming leader in printers when she arrived, and by the time she left, the company still didn’t dominate any other business. Increasing patents is nice, but only if it pays off for shareholders, which it didn’t. Neither did anything else during her tenure. The stock dropped, and while she likes to point out that her time was a tough period for tech firms, it was a lot tougher for HP shareholders than for those of IBM, Dell, or the S&P tech index. She underperformed them all.

If you want the withering details of her performance, the best analysis by far was written by the great Carol J. Loomis in a 6,700-word 2005 Fortune cover story called “Why Carly’s Big Bet Is Failing.” Here’s Loomis’s conclusion:

“It is right to ask whether this whirlwind [Fiorina] has succeeded. And inevitably that question must be answered in two parts. First, under the only lens that matters, did the famed merger that Fiorina engineered between HP and Compaq produce value for HP’s shareholders? Second, with that merger nearly three years past, is HP in shape to thrive in a brutally competitive world?

“The answers are no and doubtful.”

A few weeks after that article appeared, the HP board fired Fiorina. The company gained almost $3 billion of market value on the news that day. She was only 50 years old and has not run a publicly traded company since.

It may well be that, as Chris Christie said during last week’s debate, the voters don’t really care how well or badly she did at HP. But it’s hard to see how Fiorina avoids talking about it, since it’s the only record she has to present to the voters. And the more closely they examine it, the worse she’ll look.

What We're Reading Today

Fallout from Volkswagen cheating scandal

Volkswagen stock fell more than 20% in the first day of trading since the Environmental Protection Agency accused the German automaker of cheating on U.S. emission tests. The company has stopped selling the diesel-powered cars in question in the U.S. and Chief Executive Martin Winterkorn has apologized as Volkswagen conducts an internal review. For Winterkorn standing in the company, the scandal comes at a perilous time.  WSJ

Jeffrey Immelt warns more U.S. jobs to move overseas

While speaking to a group in New Delhi, India, the General Electric CEO continued his campaign for reviving the Export Import Bank, which stopped lending to U.S. exporters after Congress let its charter expire on July 1. Immelt did not say how many jobs were at risk. Reuters

Apple apps hit with malware in China

The problem was a security breach in the China App Store. It's a painful setback for Tim Cook's company as it works hard to build sales in the world's largest cell phone market.   Quartz

China's president has been attending a lot of funerals...

...and it's a sign that Xi Jinping needs more friends in the government. The funerals are for retired officials that leaned both left and right within the Communist Party. Xi may be seeking new support as China's economic struggles threaten to undermine his leadership. Business Insider

Greece's Tsipras returns as Prime Minister

In a surprising result, Greece's left-leaning Syriza party won elections on Sunday, securing its leadership for a second time in nine months. For Alexis Tsipras, the result is an endorsement of his efforts in negotiating bailout conditions with the European Union as he starts a second term as Prime Minister. BBC

Correction: On Friday, we mentioned that Angela Ahrendts topped the Most Powerful Women list in pay. Her take home pay was $73 million, still an impressive 5-month figure. It's, however, not the $522 million we stated, which is the sum of the entire Most Powerful Women list's pay. We apologize for the confusion.

Building a Better Leader

Using mood to boost productivity

A new app tries to spark the productivity boost one gets from being in a good mood, and it might show which days employees work best.  Fast Company

64% of employers support a minimum wage boost

The majority, 61%, say that $10 is the right amount. Huffington Post

For more memorable presentations...

...use the science behind explicit memory. Make your audience work. Harvard Business Review

The Pope Comes to America

Does the Pope hate capitalism?

Some of Pope Francis's comments on the poor, the market, and Occupy protests have fueled conservative leaders' and commentators' disdain. But he has never disavowed the private ownership of property. So where does he stand? It's complicated. Fortune

Obama to welcome the Pope on Tuesday

With the Pope offering support for environmental improvement, economic equality, and renewed relations with Cuba, the pontiff's visit could be seen as a boost for President Barack Obama. But with the future of Planned Parenthood in the air and the recent jailing of a Kentucky country clerk over her refusal to issue gay marriage licenses still fresh, conservatives may also use the Pope's presence to boost their cause. NYT

Declining membership and the Catholic church's struggles

Despite Pope Francis's popularity worldwide, church membership is declining sharply in much of the U.S. But continuing flows of Latin American immigrants into  the West and South are boosting membership in those regions. The trend is pitting many older church leaders against newer dioceses. WSJ

Fortune Reads and Videos

McDonald's snubs Burger King's peace offering

Instead it's supporting the U.N. World Food Programme’s migrant crisis response in Europe and the Middle East. Steve Easterbrook's company will partner with Google, Facebook, Twitter, and others - including Burger King - to fund an advertising campaign for donations to the cause. Fortune

Alibaba's investors should still be wary...

...of the executive compensation strategy that hasn't changed since the company's IPO.  Fortune

GM's Mary Barra joins #SmartGirlsAsk campaign

The hashtag, launched by comedian Amy Poehler before the Emmys, sought smarter questions for starlets walking the red carpet. Fortune

JP Morgan's Jamie Dimon thinks CEOs make bad presidents...

...because running a successful government requires specific, well-honed skills. Fortune

On This Day...

…in 1780, American General Benedict Arnold met with the British, agreeing to provide plans to bring down West Point for a large sum of money. It's one of the most famous examples of really bad leadership -- treason -- in U.S. history. History Channel

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