hp compaq combination essay

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The world’s major corporate Technology merger began in Sept. 2010 2001 the moment HP declared that they would get Compaq in an all share purchase respected at $25 billion. More than an 8 month period ending in May 2002, the merger exceeded shareholder and regulatory endorsement with the outcome being a single company. The new HP has annual product sales of approximately $90 billion which is comparable to IBM, and a great operating income of almost $4 billion. The merger was led by simply Carly Fiorina, the chairwoman and CEO of HEWLETT PACKARD.

The president with the new HP was Jordan Capellas who was the former chairman and CEO of the aged HP and who has recently resigned which is now the CEO of World Com. Overall, many analysts were critical of the merger right from the start since equally Compaq and HP were struggling firms before the merger. The common question that has been raised by analysts is: Carry out two unable companies make a better merged company? Some analysts include indicated the merger can be described as gamble which it is difficult to determine any targeted logic at the rear of the combine considering that the majority of I.

To acquisitions are generally not successful.

Prior to the merger, Compaq has been unable to grow irrespective of previously obtaining Digital, when HP was trying to expand internally, without much success. Both companies were still adapting to acquisitions they may have made in earlier times and the two were adapting to new command (Fiorina and Capellas). The merger package also means there are many overlaps in products, technologies, distribution channels, services, facilities and jobs. Staff morale is known as a threat into a successful merger as there are numerous layoffs -15, 1000 employees. The claimed twelve-monthly cost savings of around $2. 5 billion us dollars by the year 2004 portions to only a few % from the combined costs of the two companies. Gartner Group research has indicated the merged business has failed to perform a good enough work of showing the benefits of a great acquisition of this kind of scale to justify the deal’s risk as it is generally known that technology mergers rarely work.

In addition , both equally companies in the past have had trouble to resolve issues between indirect and direct sales stations. The ethnical background of both firms is quite diverse and incorporation will take a very long time. The culture at HORSEPOWER is based on general opinion; Compaq’s culture on the other hand is founded on rapid decision making. From an optimistic perspective, most botched technical mergers included companies that have been trying to purchase their method into new businesses they understood little about, this is not the truth with the HP/Compaq merger. In addition to servers and PC’s, they have several areas where their products overlap e. g.: they are both take part in making info -storage products and both make handheld computing devices. In addition , both companies also bring different strong points to the table.

Compaq has done a more satisfactory job in regard to engineering an entire line and HP has been good in customer products. The justification offered by HP senior management shows that a merger will permit them to take on two of all their biggest rivals, IBM and Dell. In conclusion, it truly is viewed by many analysts that there will be at least a couple of more numerous years of bitter infighting which will cause the new HP to lose direction and good personnel. This is nice thing about it for opponents such as APPLE and Sun as both of them will be able to decide on off the marketplace while the new HP is usually distracted by merger. The new HP could possibly be a danger to APPLE but not anytime soon. It could take several years to determine if the major merger in I. Capital t history would have been a success or a complete lemon.


Information technology (IT) is a wide field that covers almost all aspects of controlling and digesting information. IT professionals design and style, develop, support, and manage computer software, hardware, and sites. From the joyful growth of their early years towards the uncertainty of recent times, the IT sector has stabilized”with job progress rates right now rising steadily”and continues to change in order to meet the needs of the business world. While the wild optimism that ornamented the THIS industry some three years back has become deflated, the IT market is changing to a changing market. New developments including creating infrastructure for mobile phone technologies is going to continue to assure the vigor and viability of the sector. And as the industry responds to new company needs, it will continue to develop into a mature profession, an occupation versatile enough to adapt to new requirements and secure enough to back up new innovative developments and improvements.

In technology (IT), India has built up valuable company equity inside the global market segments. In IT-enabled services (ITES), India features emerged as the most preferred place to go for business method outsourcing (BPO), a key drivers of progress for the program industry plus the services sector. The THIS industry is passing through a phase of mergers and consolidations in India mainly in line with global trends. Businesses are focusing on organic and natural as well as inorganic growth. American indian IT companies are prowling to get potential acquisitions both in the domestic and foreign markets. 3 American indian software firms ” TCS, Infosys, and Wipro have the ability to crossed the billion money mark.

Competition in the Indian IT industry is elevating leaps and bounds with global giants like IBM, Accenture, and CSC and so forth Trends over the last five years tell the storyplot of Dell’s increasing business, at the expense of its competition. This amount of competition caused amerger between HP and Compaq in 2001; IBM has refocused its focal points to lucrative corporate clients. In 2003, the LAPTOP OR COMPUTER industry grew 11 % as a whole. In spite of differing concentrates, all players saw a heightened demand simply by consumers achievable systems.



In 1938, two electrical anatomist graduates coming from Stanford School called Bill Hewlett and David Packard started their business within a garage in Palo Enorme. In a year’s time, the partnership called Hewlett-Packard was performed and by the year 1947 HORSEPOWER was included. It began offering stocks and options for public trading ten years later. The business has been progressing ever since as its profits grew from five and fifty percent million dollars in 51 to regarding 3 billion dollars in 1981. The pace of growth realized no range as HP’s net income went approximately 42 billion dollars dollars in 1997. Starting with manufacturing sound oscillators, the organization made their first pc in the year 1966 and it had been by 1972 that it launched the concept of personal computing by simply introducing the first medical hand-held. HEWLETT PACKARD introduced the first pc in the year 1980. The company is also known for the laser-printer which usually it released in the year 85.

HP ” Product Profile

* Laptop/Notebooks

5. Palmtops/PDA

* Printers and Creating Consumables

* Digicams

2. Scanners

* Monitors

2. Mainframes

Main Competitors

5. IBM ” Servers, PCs, Storage and IT companies

2. Dell ” PCs

* Cannon ” Machines, Fax, Copiers and Optic Equipment

* Compaq ” PCs, Servers and Pocket Computer systems


Compaq Computer Firm is a north american personal computer company foundedin the year 1982. Completely the charm of being called the largest producers of personal computers worldwide. The business was formed by simply two older managers by Texas Devices. The name of the organization had come from-“Compatibility and Quality. The company introduced it is first laptop in the year 1983 after in a price of 2995 us dollars. In spite of getting portable, the problem with the pc was that it seemed to be a suitcase. However, there were enormous commercial advantages from the computer as it sold much more than 53, 1000 units in the first 12 months with a income generation of 111 , 000, 000 dollars. Organization existed while an independent corporation until 2002, when it was acquired for $25 billion dollars by Hewlett Packard.

COMPAQ ” Item Portfolio

* Business Computing Group

2. Mainframes

* Computers

* Workstations

* Internet products

* Social networking Products

* Industrial Products

* Portable ones

* Small and Medium Business Solutions

Major Competitors

* IBM ” Web servers, PCs, Storage area and IT services

* Sun Microsystems ” Servers

* Dell ” Personal computers

5. HP ” PCs, THIS Services and Pocket Computers

* Palm ” Pocket Computers




“If HEWLETT PACKARD was advancing at these kinds of a tremendous pace, what was the reason thatthe organization had to combine with Compaq?  Carly Fiorina, who have became the CEO of HP back in 1999, a new key role to play in the merger that took place about 3rd Sept. 2010, 2001. She was the 1st woman to acquire taken over as CEO of this big firm and the 1st outsider as well. She performed very proficiently as the lady travelled a lot more than 250, 000 miles inside the first 12 months as a CEO. Her basic aim was to modernize the culture of operation of HP. The girl laid great emphasis on the profitable attributes of the organization. This demonstrates that she was very expensive in her approach as being a CEO. Inspite of the growth on the market value of HP’s reveal from 54. 43 to 74. 48 dollars, the corporation was still inefficient.

This was as it could not meet the targets as a result of a failure of both firm and sector. HP was forced to cut down on jobs and in addition be steer away from from the advantage of having Selling price Water House Cooper’s to address its audit. So , however, job of Fiorina was under risk. This resulted in improvement in the internal tricks of the company has not been going to become sufficient for the company’s accomplishment. Ultimately, the company had to certainly plan out something different.

So , it had been decided the fact that company can be acquiring Compaq in a share transaction in whose net worth was 25 billion dollars dollars. At first, this merger was not planned. It started out with a telephonic conversation among CEO HORSEPOWER, Fiorina and Chairman and CEO Compaq, Capellas. The idea behind the conversation was going to discuss on the licensing agreement but it extended as a conversation on competitive strategy and then a combination. It took two months for further studies and by Sept, 2001, the boards with the two businesses approved with the merger.

Inspite of the decision coming from the CEO of HP, the merger was strongly compared in the company. The two Entrepreneurs believed the only method to fight the growing competition regarding prices was to have a merger. Nevertheless the investors plus the other stakeholders thought that the corporation would never manage to have the devotion of the Compaq customers, if products can be purchased with a great HP company logo on it. Other than this, there were questions for the synchronization from the organization’s users with each other. This is because of the difference in the organization traditions as well. Though these were likely to serious issues with respect for the merger, the CEO of HP, Fiorina justified a similar with the reality the merger would take away one severe competitor inside the over-supplied COMPUTER market of people days. She saidthat the marketplace share from the company is bound to increase with the merger plus the working device would dual.


* HORSEPOWER was not changing to technology fast enough

2. Margins had been going down

* IPG (HP’s The image and Stamping Group) was the leader in its market part but did not rank anywhere among leading 3 in servers, storage space or companies * Creating line was facing competition from Lexmark and Epson which were advertising lower-quality inexpensive printers

* Had to build solid complementary business lines


* By simply 2001, as the market stumbled, conference growth objectives became hard for HORSEPOWER and it was forced to minimize jobs and scrap strategies

2. As a result HP stock value dropped considerably

2. Turning the corporation around essential more than just strategy from within


2. Increase competition with key competitors my spouse and i. e. APPLE, Dell

* Spend less by $3 billion annually by 2005

5. Increase revenue for investors

5. Face the battle of a diminishing market


2. The merger of HP with Compaq will create excellent customer value by expanding its range of products and together HP and Compaq can focus on R & Deb in a better extend.

5. The second best benefit that the merger will certainly emerge can be cost gain by making cost synergetic effects reaching approximately $2. 5 bn each year.

* Drive a significantly improved price structure, approximate assets of $56. 4 billion, and annual income of $87. 4 billion and gross annual operating earnings of $3. 9 billion.

* Adds up to world-class creativity and top quality through the merger of a pair of the leading IT companies of the world.

* Larger PC location resulting from the merger very likely to increase risk and water down shareholders interest.

* Operations in more than 160 countries and over 1, 45, 1000 employees.

5. Expand the numbers of you can actually service specialists.

* Increases access to the marketplace with Compaq’s direct ability and low priced structure.

* Work force decrease by around 15, 000 employees keeping around $1. 5 billion per year.

2. Improve HP’s market share.


* HP’s failure to satisfy target (in spite of increased share value)

* Combination as the way to fight the growing competition in terms of prices

5. Merger could eliminate one player within an oversupplied PC market

* To compete with APPLE and other firms

* Keep costs down

2. 1990’s IT recessionary stage

2. Merger supposed to yield personal savings projected to get to $2. 5bn annually simply by 2004

* Advantage of even more volume of sales

5. Development of direct distribution capability

5. Strengthen sales team

2. Improve customer base


Merger might create a full-service technology firm capable of doing everything from advertising PCs and printers to setting up complicated networks. Merger would remove redundant item groups and costs in marketing, marketing, and delivery, while at the same time protecting much of the two companies’ profits.


* Combination will produces immediate end to end management

* Compaq was a clear Number 2 inside the PC organization and more powerful on the business side than HP, yet HP was stronger around the consumer side. Together they will be Number 1 in market share in 2001

* The merger might also tremendously expand the numbers of the company’s service professionals. As a result, HORSEPOWER would have the greatest market share in most hardware market segments and turn the number 3 in business in providers

* Improves entry to the market with Compaq’s immediate capability and low cost structure

2. The much bigger firm would have range advantages: gaining bargaining electrical power with suppliers.


* HORSEPOWER and Compaq have very complementary R&D capabilities

* HORSEPOWER was solid in core and high-end UNIX computers, a weakness for Compaq; while Compaq was strong in low-end industry regular (Intel) web servers, a weakness for HORSEPOWER

5. Top managing has experience of complex company changes

* Merger would cause work force lowering by about 15, 1000 employees conserving around $1. 5 billion per year


* Merger will mean substantial increase in profit perimeter and fluid

2. 2 . 5 billion is a estimated benefit of annual synergies

* Supplies the combined organization with better ability to reinvest Even though it appeared to be advantageous to hardly any people in the beginning, it was the strong perseverance of Fiorina that the lady was able to stand by her decision. Wall Street and everything her buyers had gone against the company lampooning her ideas with the saying she has made 1+1=1. 5 by her extravagant techniques for expansion. Fiorina had put it this way any time the company’s merger, not only would it have a greater share on the market but likewise the units of development would double. This would signify the company could grow immensely in amount.

Her think of competing with all the giants during a call, IBM could also become a reality. She was of the look at that much from the redundancy inside the two companies would lower as the interior costs about promotion, advertising shipping might come down while using merger. This will produce the slightest trouble for the collection of revenue. The girl used the ideas ofcompetitive positioning to justify her plans in the merger.

Your woman said that the merger will be based upon the ideologies of loan consolidation and not on diversification. Your woman could also guard allegations resistant to the change in the HP was. She was of the look at that the HORSEPOWER has often encouraged alterations as it is about innovating and taking strong steps. Your woman said that the company requires getting consistent with creative imagination, improvement and modification. This merger acquired the capability of providing the identical.


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