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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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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.
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.