When was compaq acquired by hp

It says that the deal "will accelerate our strategic transformation by years by bolstering all of our businesses, including enterprise computing, PCs, IT services and printing and imaging. The statement will be sent to shareholders, upon SEC approval, accompanied by a card that can be sent to the company as an anti-acquisition vote. December Walter Hewlett files an opposition to the acquisition with the SEC, focusing on the companies' financial downslides since the deal was announced.

Compaq's share price has plummeted November David Packard, son and namesake of HP's co-founder, steps forward as an opponent to the company's acquisition of Compaq, releasing a statement to the San Jose Mercury News California detailing his reasons, many of which coincide with Walter Hewlett's. He also expresses concern about layoffs that will result from the deal. November Walter B. The family and trust own more than million shares, or 5 percent, in the company.

September The EC announces that it will investigate the planned acquisition, as standard practice. Unfortunately, the bulk of the savings will be achieved through 15, layoffs. I think they turned the combined company into a strong channel company, which is what we were all concerned about as partners. Wald's company Riata Technologies which merged with White Glove Technologies in was a loyal Compaq partner, and Wald didn't want to see his top vendor become part of HP.

He was greatly concerned about the potential disruption in the channel, too. Some of those fears were realized; Wald said the taxing Compaq integration negatively impacted Riata's business as HP struggled to find the right channel strategy for the combined company. But after the integration was completed, Wald said HP refined its partner program and increased support for its enterprise product lines. To their credit, the folks at HP continued to invest in the channel and in the relationships with partners.

Fiorina and Michael Capellas, the head of Compaq at the time of the merger, could not be reached for comment. He admits that when he heard the announcement that day, he was in "a state of panic" and feared the merger would be a disaster. A Compaq partner prior to the merger, Richie said the memories of another big IT merger were fresh in his mind.

But his fears began to erode slowly as HP began to integrate Compaq. In particular, Richie said he was impressed with how the two companies assimilated their respective partner programs into a combined effort that worked for both sets of partners. Looking back at the historic merger, partners say one of the biggest pluses — if not the biggest — was the enterprise focus Compaq brought to HP.

A very simple question that arises here is that, if HP was progressing at such a tremendous pace, what was the reason that the company had to merge with Compaq? Carly Fiorina, who became the CEO of HP in the year , had a key role to play in the merger that took place in She was the first woman to have taken over as CEO of such a big company and the first outsider too.

She worked very efficiently as she travelled more than , miles in the first year as a CEO. Her basic aim was to modernize the culture of operation of HP. She laid great emphasis on the profitable sides of the business.

This shows that she was very extravagant in her approach as a CEO. This was because it could not meet the targets due to a failure of both company and industry.

So, even the job of Fiorina was under threat. Ultimately, the company had to certainly plan out something different. So, it was decided that the company would be acquiring Compaq in a stock transaction whose net worth was 25 billion dollars.

Initially, this merger was not planned. The idea behind the conversation was to discuss on a licensing agreement but it continued as a discussion on competitive strategy and finally a merger. It took two months for further studies and by September, , the boards of the two companies approved of the merger.

The two CEOs believed that the only way to fight the growing competition in terms of prices was to have a merger. But the investors and the other stakeholders thought that the company would never be able to have the loyalty of the Compaq customers, if products are sold with an HP logo on it.

This was because of the change in the organization culture as well. Even though these were supposed to serious problems with respect to the merger, the CEO of HP, Fiorina justified the same with the fact that the merger would remove one serious competitor in the over-supplied PC market of those days. She said that the market share of the company is bound to increase with the merger and also the working unit would double. Hoopes, Even though it seemed to be advantageous to very few people in the beginning, it was the strong determination of Fiorina that she was able to stand by her decision.

This would mean that the company would grow tremendously in volume. Her dream of competing with the giants in the field, IBM would also come true. She was of the view that much of the redundancy in the two companies would decrease as the internal costs on promotion, marketing and shipping would come down with the merger.

This would produce the slightest harm to the collection of revenue. She used the ideas of competitive positioning to justify her plans of the merger. She said that the merger is based on the ideologies of consolidation and not on diversification. She could also defend allegations against the change in the HP was. She was of the view that the HP has always encouraged changes as it is about innovating and taking bold steps.

She said that the company requires being consistent with creativity, improvement and modification. This merger had the capability of providing exactly the same. Mergers and Acquisitions, Unique Opportunity: The position of the enterprise is bound to better with the merger. Other than this, one can also access the capabilities of Compaq directly hence reducing the cost structure in becoming the largest in the industry. Finally, one could also see an opportunity in reinvesting. Stronger Company: The profitability is bound to increase in the enterprise, access and services sectors in high degrees.

The company can also see a better opportunity in its research and development. The financial conditions of the company with respect to its EBIT and net cash are also on the incremental side.

The company could also conduct a better segmentation of the market to forecast its revenues generation. This would go to as much as 2 and a half billion dollars of annual synergy. Ability to Execute: As there would be integration in the planning procedures of the company, the chances of value creation would also be huge. Along with that the experience of leading a diversified employee structure would also be there. HP to buy Compaq, Opposition to the Merger.

In fact, it was only CEO Fiorina who was in favor of going with the merger. This is a practical application of Agency problem that arises because of change in financial strategies of the company owners and the management. The reason was that HP was not able to meet the demand targets under her leadership. But the owners were against the merger due to the following beliefs of the owners:. The new portfolio would be less preferable: The position of the company as a larger supplier of PCs would certainly increase the amount of risk and involve a lot of investment as well.

In fact the company owners also feel that there would be a lower margin and ROI return on investment. Strategic Problems would remain Unsolved: The market position in high-end servers and services would still remain in spite of the merger. The price of the PCS would not come down to be affordable by all. The requisite change in material for imaging and printing also would not exist.

This merger would have no effect on the low end servers as Dell would be there in the lead and high-end servers either where IBM and Sun would have the lead. The company would also be eluded from the advantages of outsourcing because of the surplus labor it would have.

So, the quality is not guaranteed to improve. Finally, the merger would not equal IBM under any condition as thought by Fiorina. Huge Integrated Risks: There have been no examples of success with such huge mergers. When HP could not manage its organization properly, integration would only add on to the difficulties. It would be even more difficult under the conditions because of the existing competitions between HP and Compaq.

Being prone to such risky conditions, the company would also have to vary its costs causing greater trouble for the owner. The biggest factor of all is that to integrate the culture existing in the two companies would be a very difficult job. Financial Impact: This is mostly because the market reactions are negative. On the other hand, the position of Compaq was totally different from HP. As the company would have a greater contribution to the revenue and HP being diluted at the same time, the problems are bound to develop.

This would mean that drawing money from the equity market would also be difficult for HP. In fact this might not seem to be a very profitable merger for Compaq as well in the future. The basic problem that the owners of the company had with this merger was that it would hamper the core values of HP.