Silicon Valley hot shots take the flak for bad times

Opinion

Silicon Valley hot shots take the flak for bad times

Stephen Phillips in San Francisco reports on how adulation has turned to anger

It's open season on CEOs in Silicon Valley at the moment. The corporate goldfish bowl of the world's IT hothouse has always revered its power brokers as if they were rock stars. But fame is a two-way street as the honchos of four of the industry's most august firms discovered last month. Being hailed as a visionary in the good times makes you fair game when things turn bad.

First to enter the dock was Cisco's John Chambers at the networking giant's half-yearly financial conference in downtown San Jose at the heart of Silicon Valley's industrial sprawl. While his stewardship didn't come under fire, his insistence on Cisco's growth prospects despite clear signs of slowdown in the networking market against the background of a slowly braking US economy sounded a Pollyannaish tone that was met with derision by financial analysts. The gloves came off despite Chambers' place in the pantheon of IT CEOs as the mastermind of Cisco's astute acquisition strategy.

Next to face Wall Street's withering gaze was Hewlett-Packard's Carly Fiorina at the computer and printer maker's investment analyst open day down the road in Palo Alto. Her assurances that HP was on track to meet 15-17% quarterly sales growth expectations rang hollow a few weeks after the firm announced a gaping 20% profit shortfall for its previous financial quarter - which had been preceded by similarly bullish predictions.

As a mark of contrition for the earlier bad tidings, Fiorina said she and other HP executives would forgo their bonuses for the second half of 2000. But such self-denial failed to placate analysts, who subjected her to a bruising question-and-answer inquisition. Fiorina's reversal of fortune has been brutally quick. Until last summer she was still basking in gushing tributes from commentators who effused about the dash and style the chic medieval history and philosophy graduate brought to Silicon Valley's founding tenant.

Next on the feet-of-clay roster was Apple's Steve Jobs. Just months after winning a Gulfstream Jet plane from his board as a token of gratitude for the Macintosh computer maker's spectacular revival under his second term as CEO, Jobs dished the shock news in early December that Apple expected a loss from one of its traditionally briskest retail seasons.

From Apple's Cupertino offices, Jobs lamented ceding leadership of the schools computer market to Dell. His come-uppance has also been swift. An anti-establishment iconoclast, the maverick Jobs is widely credited with lending Apple its edgy, counter-culture appeal. Until last summer he was touted as Silicon Valley's "comeback kid," returning in 1997 to the company he had founded 20 years earlier - but from which he was ousted in the mid-80s - to lead it back to profit from the brink of insolvency.

The final fall guy is Larry Ellison of Oracle. The database software kingpin, whose futuristic Redwood City headquarters stands like a portal to Silicon Valley heading south from San Francisco on highway 101, continues to deliver explosive financial results. Ellison hasn't issued any hard-to-swallow forecasts - no more than usual, that is - but Oracle's share price has plummeted as financial analysts voice fears that Ellison's autocratic, abrasive style could spark a fatal haemorrhage of executive talent.

Wall Street's alarm was sparked by the recent abrupt departures of Oracle's highly regarded chief operating officer Ray Lane and executive vice-president, Gary Bloom, long considered Ellison's successor. Both said they left because there was no room to wield authority in the same boardroom as Larry. Ellison's case shows that the ultimate pitfall of Silicon Valley's cult of the personality is swallowing the hype about your own invincibility.

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This was first published in January 2001

 

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