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HP/Compaq Merger Apparently Approved
Spinality writes "Looks like HP's hotly contested merger with Compaq is going ahead. Various news headlines such as this one at Bloomberg.com report that stockholders voted to merge, against the wishes of the Hewlett and Packard families. " There isn't official word yet, but this looks like
it's pretty much a done deal. Anyone else think the business world looks like a
game of Pac Man?
before they've hatched. The official tally may take as long as six weeks to be completed, and until then this is just speculation. It's still too close to call. All of these media reports remind me of, ahem, Florida.
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Check it.
The register, in their usual style, compared the voting process to a zimbabwean national election....
The time of mega mergers is here. Who cares if hundreds, nay thousands loose their jobs. Instead of innovation and growth, the companies are taking the easy way out. This works in the short run, but the economics will catch up. They can run away from slowdown only for some time, evenetually it will catch up. Luckily the economy's improving, otherwise it would have been a disaster. Such mergers are bad for consumers too. As long as they were competiters, consumers could get good products as both were trying to do one up. For example is Dell also merges with them tommorow, the competition space will get monopolized. It seems the hardware world is also going the software way. Like M$ monoplizes everything these big daddys gona eat up competition, what will we have them, open design hardware!?
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I own a small amount of HP stock and the proxy mailings for this vote were obscene. I received at least eight proxys - half from HP and half from the Packard family group. Only proxys by mail were accepted - online and telephone options were not available. The most recent proxy mailed in was the one that actually counted. All designed for maximum confusion. Messiest merger vote I've seen in a while.
Hewlett-Packard Company Chairman and CEO Carly Fiorina discussess the current course and what's ahead for Linux in enterprise and consumer applications. Ms. Fiorina highlights innovative solutions that customers are implementing today and talk about the contributions and responsibilities of the Linux and open source communities in increasing customer value for Linux users.
The end of Ms. Fiorina keynote speech is worth repeating here...
demand for linux
The company that brought us the green ogre with the thick Scottish accent and wicked sense of humor wants Linux. Companies that provide the dial tones when we pick up the phone want Linux. And in between the two are thousands and thousands more who are recognizing the power, the flexibility and the smart economics inherent in this platform - and who are attracted to its openness and the inventive spirit that is at its foundation.
We cannot disappoint customers who are clamoring for Linux solutions. Standing still is not, and will not, be our legacy - with Linux, or with any other invention that has the potential to transform this industry, as we certainly believe Linux does.
Which brings me to what I see as the real power of the Linux movement.
The secret to its success is based on a belief in what hundreds of thousands of inventors can do together when you make full use of their talents. And here again, just like all the other great inventions that came before it, like all other great steps forward, the skeptics out there said: It won't work. It won't sell. It can't be done. It won't succeed.
Your collective response: Never underestimate the power of a good idea.
I'm not sure I agree with you a hundred percent on your police work there, Lou.
Big mergers are tough to pull off in the best of circumstances. At a very nuts-and-bolts level, there's an awful lot of operations work to be done in integrating a company -- standardizing procedures, eliminating redundant staff and offices, etc. This is far from easy to do, and it is an operation that's been bungled more times than I can count by companies that should have known better, and Fiorina doesn't have any solid operations experience.
Then there's the culture clash. I interned with SGI at what used to be a Cray location back in '98, and the culture war was in full swing. Ultimately, it was the refusal of Cray die-hards to integrate (which resulted largely from the treatment of them as second-class citizens by Mountain View) that really caused SGI to puke Cray back out again.
Furthermore, all of this takes the company's attention from the market, which neither HP nor Compaq can afford to do right now. HP's core imaging products are under assault, their workstation business has taken tremendous hits in the last five years and their overall reputation as a company has gone down the tubes (remember when it was a good thing to have an HP printer? I do). Compaq is also reeling after losing substantial market share to companies like Dell; add to this the fact that Best Buy is coming out with an in-house brand, and they've got trouble.
According to an interview I heard on NPR with Fiorina, she's hoping that HP will emerge as an IBM -- a large tech conglomerate with many profit-making business units. The problem is, they're trying to do it with two units (PCs and imaging) that IBM found unprofitable enough to get (mostly) out of.
Now, add to all this the fact that this is hardly the "best of times" -- Fiorina and the other pro-merger folks have managed to alienate roughly half of their investors, including several board members and two guys with framiliar-sounding last names. There's considerable dissent within HP, too; trust me, I had lunch in a bar a block from HP's Cupertino campus last week (the Duke; I like the chicken sandwitches and Newcastle), and a lot of the conversation I overheard was downright angry.
So I think it's a mistake. There's not a lot of historical prescedence for this sort of merger working well, you're combining two ailing companies and expecting to see a healthy one emerge, and there are going to be too many internal distractions, anyhow.
If I held HP stock, I'd wait for the dust to settle a little and sell it (at this point, even if the merger doesn't go through). If you want to be in PCs, buy Dell. If you want to own shares in IBM, buy IBM.
Every year during my review, I just pray the words "slashdot.org" aren't mentioned.
You know what will sicken you even more? Even if the merer does NOT go through, HP has agreed to pay Compaq 600 million dollars for any damages caused to brand recognition. Add that to all the trade secrets that have been shared, and that's a lot of money wasted, either way.
Moon Macrosystems. Sun's biggest competitor.
History does have a sickening way of repeating itself...
I was working for Digital (remember them?) when they were bought by Compaq. I remember all the same justifications being touted back then -- "The combined company will be the #2 computer maker after IBM" and all that.
After a while, the truth of the matter became abundantly clear: the "synergy" was that Digital was hurting bigtime, while Compaq's CEO was facing serious questions as to his effectiveness. Hey presto! Let's merge the two companies! Doing so bought time for those parts of Digital that survived, and also bought time for Eckerd Pfeiffer. Any problems that the combined company faced could be attributed to the turmoil of the merger.
After about three years, though, the merger stopped being a viable excuse. Compaq faced increasing problems with profitablility and market share... kind of like Digital a few years earlier. Along comes H-P, whose CEO is facing serious questions as to her effectiveness... sound familiar?
I bailed out of Compaq shortly after the merger was announced. For my part, having gone through one round of merger turmoil, I was not eager to go through another (though said turmoil would have been a great excuse to slack off and do jack for a couple more years).