David DormanLet's start with David W. Dorman of AT&T ( T). This one is almost too pathetic to make fun of. True, he inherited a junkyard dog of a company from predecessor C. Michael Armstrong, but he hasn't done anything to improve Ma Bell in the past two years. With such an immensely renowned brand name and a legendary research-and-development team, you would think that Dorman could make his company synonymous with the global growth of networking as a way of life. Yet he appears to be pushing the company ever deeper into the background, outsourcing its wireless business in an expensive deal with Sprint, losing the price wars on bundling home wire line and broadband services to the more aggressive Baby Bells and the formerly bankrupt MCI, making its long-distance plans more ridiculously complex than ever, experimenting with a high-quality-but-high-cost enterprise strategy, pursuing Internet-based telephony too slowly and timidly -- and now, through no fault of its own, losing its local phone service connection in the recent court battle over FCC unbundling rules.
Carly FiorinaIt's fashionable these days to suggest that Hewlett-Packard ( HPQ) CEO Carly Fiorina is a genius for improving results slightly in the past couple of quarters, but let's be frank: She's not. Not even close. Under her direction, a company that was once a paradigm of Silicon Valley entrepreneurship has simply failed to make any progress at enhancing shareholder value. It is now trading about where it did in 1995. Fiorina's reign at H-P -- combined with that of the CEO just before her -- makes a great case study of exactly what not to do. They transformed a company that was fantastic at doing one thing (printers) into a company that is increasingly marginalized at that one thing and truly lousy at everything else. The stubborn, ill-conceived purchase of fading, unprofitable computer giant Compaq, has utterly failed to deliver on its promise of making shareholders richer with a soup-to-nuts strategy. The printer business still brings in the majority of the entire entity's earnings. And yet because Fiorina decided to pick a fight with Dell ( DELL) in the PC business, Dell has turned the tables and made a strategic decision to return the favor. Dell has steadily released a very nice suite of new low-cost devices made by a variety of partners. Making matters worse, it has slashed prices on ink -- the most profitable part of the printer trade.
Larry EllisonNo major technology company's chief executive has put his shareholders through more pain than Larry Ellison at Oracle ( ORCL) in the past four years. Oracle shares are down 72% from the March 2000 high, about twice as much as hardware peer Dell and about half again as much as Microsoft ( MSFT). And while most of Ellison's peers have found a way to make shares grow in the past 12 months, Oracle remains in a rut, down 11% since June 2003. A large part of Oracle's problem is that the company did so well, for so long, at getting its databases into Fortune 500 companies that there is little room for major business growth. With so few major installations left in the world, it will be difficult for Oracle to grow much faster than the global economy. Ellison's personality is another major part of the problem. His combative approach to business with partners and competitors alike has turned off investors. His quixotic attempt to do a hostile takeover of PeopleSoft ( PSFT) has justified their distrust of his instincts. Mark Anderson, a longtime technology industry observer and hedge fund manager, complains that Ellison "is so predatory -- it's as though he cannot control himself." Anderson says that Ellison would grow shareholder value more appropriately if he were more creative than rapacious. Anderson believes the PeopleSoft deal is a bid to "buy seats" for Oracle database software by purchasing and shutting down a competitor. It will probably fail, and it has been a costly distraction in the meantime.
Assorted OthersSome utilities deserve special mention for incredibly poor strategic decision-making in their executive suites. Among the worst are AES ( AES), Calpine ( CPN) and Teco Energy ( TE). Portfolio manager John LaForge, of FA Asset Management, told me that two chief executives he would put in the penalty box are Carol A. Ammon of Endo Pharmaceuticals ( ENDP) and Austin Shanfelter of MasTec ( MTZ). Ammon deserves opprobrium, he said, because she made a series of poor decisions in dealing with the Food and Drug Administration on her company's generic alternative to the addictive painkiller OxyContin. "She pandered to the FDA and let it push her around on doing extra trials when she should have held her ground," he said. Her calls cost the company valuable time to market, allowing archrival Teva Pharmaceutical ( TEVA) to outmaneuver and beat them. LaForge nominates MasTec's Shanfelter for the stonewalling his company did in not releasing its 10-K annual report to the Securities and Exchange Commission last year and all this spring. MasTec's communication has been "horrific," he said. Company officials told investors repeatedly that they would file their report within two weeks and then neither filed nor advised investors that the reports were further delayed.
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