HP Case
HEWLETT – PACKARD – COMPAQ : THE MERGER DECISION
Group members -
Key Learning From The Article –
1. Insist on innovating operating strategies.
2. Do not go ahead if you do not have a plan to increase the shareholders’ value even in the long run.
3. Do not look always for growth only in high – growth industries.
4. Evolve in house capabilities.
Note –Article main point was that nonsynergistics deals can be successful.
HP – Compaq Case –
As the PC, printing and services related to this and IT were changing fast because of customers and enterprise’s increased expectation from the manufacturer and service providers. The industry saw the biggest change from 1990 to 2000. In this period Dell became leader in PC space mainly using the the make to order concept and then dealing directly through their web site with the customers. And IBM was leader in high end high growth service related space. HP on the other hand was doing great in printing related area but not so good in IT services, PC and servers segment. ( see exhibit 3 ). Also from exhibit 4 it was clear that HP and Compaq were way behind from IBM and Dell in terms of ROE and NOPAT margin. Only shining thing was that debt to equity ratio was very low at around .35 for HP.
This merger between HP and Compaq was probably was good in the long run for both as other alternatives were not good. HP strong balnce sheet, global presence was key to adopt next gen applinaces, e services and infrastructure in high growth markets. We need to understand that in 2001 that the technology industry is in the midst of transformation. Industry was entering a period of computing which defies all limits and crosses all borders, in which everything works with everything else, everywhere, all the time. It's a world where solutions matter most, where size makes a difference, and where success will depend upon our ability to align organization to function in a seamless way to answer
Group members -
Key Learning From The Article –
1. Insist on innovating operating strategies.
2. Do not go ahead if you do not have a plan to increase the shareholders’ value even in the long run.
3. Do not look always for growth only in high – growth industries.
4. Evolve in house capabilities.
Note –Article main point was that nonsynergistics deals can be successful.
HP – Compaq Case –
As the PC, printing and services related to this and IT were changing fast because of customers and enterprise’s increased expectation from the manufacturer and service providers. The industry saw the biggest change from 1990 to 2000. In this period Dell became leader in PC space mainly using the the make to order concept and then dealing directly through their web site with the customers. And IBM was leader in high end high growth service related space. HP on the other hand was doing great in printing related area but not so good in IT services, PC and servers segment. ( see exhibit 3 ). Also from exhibit 4 it was clear that HP and Compaq were way behind from IBM and Dell in terms of ROE and NOPAT margin. Only shining thing was that debt to equity ratio was very low at around .35 for HP.
This merger between HP and Compaq was probably was good in the long run for both as other alternatives were not good. HP strong balnce sheet, global presence was key to adopt next gen applinaces, e services and infrastructure in high growth markets. We need to understand that in 2001 that the technology industry is in the midst of transformation. Industry was entering a period of computing which defies all limits and crosses all borders, in which everything works with everything else, everywhere, all the time. It's a world where solutions matter most, where size makes a difference, and where success will depend upon our ability to align organization to function in a seamless way to answer