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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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When I finally see an announcement that it's happened and start seeing some Hewlett PackPaq(tm) boxes on the shelves, then we can start talking.
Randal Graves says: I'm a firm believer in the philosophy of a ruling class... Especially since I rule.
Which is different from an actual tally.
Is she taking a cue from the last Pres. election and getting on the news with a fait accompli in the hopes of discouraging the last remaining mail-in proxy voters? Yes, AG did it backwards and conceded prematurely, but the media had no problem projecting before the polls closed. Lesson learned by Carly?
"As God is my witness, I thought turkeys could fly." A. Carlson
I find it disheartening that it's impossible to maintain a business with integrity and vision in the face of greed. The Hewlett family are not exactly soft, left-wing hippies; they just wanted to protect the strength of their brand.
Prepare to see the quality of HP products plummet. Prepare to see a slow death of niche imaging products.
Prepare to see layoffs of otherwise securely employed folks. Rah rah, share value.
Their network printers were so nice...
Interesting watching the share prices of HP (NYSE:HWP) and Compaq (NYSE:CPQ) - makes it clear what the markets/analysts think of this!
quick question...who else is now big in the world of retail computers...meaning like, you walk into a Best Buy or a Sears, whose computers are you gonna see??? this doesn't matter to me, cause i would personally never buy a computer from a store like that....but i'm just curious, becuase it seems like Compaq and HP were always the majority of the retail desktops out there...who is left to compete? or are they gonna have a virtual monopoly in that field???
"Facts are meaningless. You could use facts to prove anything that's even remotely true." - Homer Simpson
This merger did not make sense for HP. Why would a company that is trying to get out of the desktop computer business buy another company that has a large desktop manufacturing facility. I agree with the Hewlett family for blocking this merger. Just because the merger might be approved by the voters by the narrowest of margins does not mean this is good for HP. HP is paying too much for bigger stake in the low margin pc market. What happened to HP's focus of delivering services?
``A decisive majority'' of shares not affiliated with the Hewlett and Packard families voted yes, Fiorina said.
It's going to take more than just a majority of non-hewlett shares to swing this one. The Hewlett family's shares account for 18% of the company. It's going to take *61%* of the remaining 82% to make a majority of the total shares.
Don't care if Carly is running HP into the ground but respect her Linux friendlyness?
Allow me to weild the clue-stick here. If HP disappears because Ms. Fiorina wants to measure dicks with Mr. Palmisano of IBM, she might as well be giving weekly handjobs to Mr. Torvalds for all the good it will do Linux.
In fact, if HP does get involved with Linux heavily and then goes down to mismanagement, they'll become just more fodder for the MS FUD machine: another Linux comany bites the dust.
"As God is my witness, I thought turkeys could fly." A. Carlson
I can certainly agree on the devices side. I support many, many HP printers in a mid-sized University Library, I'll tell you what, if you use a Deskjet, be prepared to fight to the death to get rid of all the other software that gets installed... I just wish that they would quit with the whole "let's see how much extranious software we can install before the machine becomes completly unusable" bit and get back to work!
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.
Have you ever seen a "what's good for Pac Man is good for the game" cheat?
The whole HP-Compaq merger thing is a typical example of how high-level executives who understand "business" think:
- They have to "do something" to justify their compensation.
- They don't understand the technology, so they don't have a clue as to how to make use of the innovations their employees generate (Xerox comes to mind immediately, but they're just the most obvious example).
- They do understand high-level finance, and how to fire people to create short-term gains.
So, they do what they understand - move big pieces around on the board, construct complex financial objects that obscure the connection between their actions and company performance, and fire people whose functions are superficially redundant.
To a Lisp hacker, XML is S-expressions in drag.
sPh
I have a pitiful few shares of HP stock from my time there, and over the past few months, I've received an absolute torrent of competing proxy solicitations from the HP board and Walter Hewlett. Every week, I got at least one new proxy card from each party with a "send this in Right Now" letter. This stuff arrived faster than one could conceivably respond (and even though I'd promptly returned the first green proxy card I got...) Towards the end, the HP board even priority-mailed me a prepaid Fedex envelope with another proxy card, and shortly thereafter a premetered ($3.50) priority-mail envelope. Last, and IMHO rather underhandedly, the board set up a phone-in-and-vote-your-proxy process during the last three or so days, something they would NEVER have let their opposition get away with. UN election monitors would NOT approve...
Also worthy of note is the tone of the cover letters: the Walter Hewlett "anti" camp focused on the bad business sense of the merger, but the Board quickly started a series of personal attacks on Walter Hewlett. This did NOT impress me with their confidence in their case: when you run out of logical arguments, slander your opponent's person.
It ain't over 'till the fat lady sings, and there is NO reliable way to guess who'll still be standing to deliver that final aria. The tons (literally!) of proxy cards sent in to the warring factions' accountants must be sorted and matched by sig and date to weed out proxies revoked by subsequently-sent proxies (and since so MANY cards were sent out, there'll be hundreds if not thousands of revotes); this will certainly take a week. Also consider (shock horror!) the possibility that the electronic or telephonic proxy-submission processes might have been manipulated. Carly's no Ken Lay, and it sure ain't the HP Way, but there's a LOT riding on this (several top management jobs, for example), so the possibility of skulduggery is NOT to be ignored.
"My strength is as the strength of ten men, for I am wired to the eyeballs on espresso."
In addition to the Compaq merger, HP also plans to merge with Intel and UPS.
No comment was give to queries if the resulting company would be called Hic-UPS.
Have you read the moderator guidelines? Well, have you, PUNK? (and I want a Karma: Gnarly option)
Anyone else think the business world looks like a game of Pac Man?
It's pure math, really. There is a significant, steady stream of new businesses being created, even if you only count the ones that make it past the infancy stage. Additional ones are being created buy spin-offs/spin-outs/demergers/whateveryoucallits.
In a country with a relatively stable population, this can only mean one of two things: Either the average size of firms must be decreasing, or a number of firms must be disappearing. The strongest of these two factors will of course be the latter. Given that the two ways in which companies can disappear are bankruptcies/liquidations and mergers, you could say that mergers are good. Even if a merger is followed by layoffs etc., a company remains to pay severance packages and face other liabilities. Furthermore, a merger is usually less wasteful than closing a company, as valuable assets such as brand names are more likely to be preserved.
In a dynamic world with quick changes in technologies and customer preferences, continuous restructuring is necessary and desirable. Mergers are important mechanisms of such restructuring, alongside entrepreneurship, bankruptcy, strategic alliances etc.
Now, I have to admit, I'm biased, since I work for one of the little guys, but I wouldn't work for 'em if I didn't feel strongly about it.
Say what you will about the mom and pop shops, but I've seen customer after customer come to us utterly frustrated by their experience with a name-brand pre-built. Seriously, the next computer you get, don't just waddle down to Best Buy or Sears, check out the small shops.
In my opinion, you get better value, better support, and a better warranty from the smaller companies than you do from the big ones.
Anyway, just my 2 bits.
I have friend who used to work at HP and still owns stock. Two things he says:
1. a. He is not for the merger
b. Does not have a single friend who is for the merger
c. Does not have a single friend who knows
of another co-worker who is for the merger
2. a. He does not like Carly
b. See 1b
c. See 1c
Too bad to see a company run by engineers now being led by a history major(i think).
For what it's worth.
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.
The reasons that this merger is just fine with the government are pretty simple. There's a measure for each industry called the Herfindahl-Hirschman Index. If a merger doesn't make this number go over a certian boundary, it's all good. HP and Compaq are in an industry that is diversified enough to handle a horizontal merger like this one.
I agree with Carly that HP is in need of major repair - the HP way, though laudable, represents a bygone era that simply can't be applied to modern business. That said, combining HP with another model of mediocrity, Compaq, in a hope to eek out savings-through-scale in the cut-throat, low-margin hardware business is simply not going to increase value.
These companies will spend at least two years properly integrating, during which time Dell and IBM will continue to lead, and in fact increase their leads in hardware and services. After the dust has settled on the two year merger process, the new HP will simply make its quarterly numbers by cutting staff and relying on long-term contracts in its traditional businesses....like 90% of the other mergers of the recent past.
You just don't see many of those in store shelves, so Apple looks expensive.
I bought an original Bondi Blue iMac in the fall of 1998. (I was poor at the time, so I financed the machine through Apple Credit. I paid it off well ahead of the eight year term, though.) It was $1,299, and it was my fourth Mac... I had previously owned an LC, a PowerBook 145, and for four years, a Quadra 840av. (Easily the most stable and "personable" computer I've ever owned, even including the iMac.)
My wife eventually started using the iMac so much that I decedid to get myself a machine. I didn't want to spend another 1300 bucks, so I built a PC and had someone give me a monitor... It was a Celeron 333 running at 500MHz, and it cost me about $700 to build over several months.
By this time, my wife wanted to watch DVDs on her machine... sorry, I said, it can't do that. So I bought a set-top box, and she was happy. Then she saw her friends making mix CDs, and she wanted to do that. OK, we can buy an external USB CD-RW, but it's $300 (year 2000) and it's limited to 4x. No thanks; I put a 16X CD-RW in my PC and it worked fine for $100.
She needed a bigger hard drive (we replaced the 4 GB drive in the iMac with a 36 GB for $200), and added 256 megs of laptop RAM for $120. Thank God for standard components.
Eventually she's compaining that the processor is too slow. So OK, I put a Celeron 800 in my PC, and give it to her. (I'm a little more liquid by this time, thanks to a big promotion.) She bitched about the UI differences for exactly two days, before realizing that Win2000 had actually run Eudora and Netscape for two days without crashing. (This was a problem on the iMac.)
So, I get another PC now. (Mid 2001.) Go down, look at slot-loading iMacs with CD-RW and a decent amount of RAM, $1500. Look at G4s, drool, and see $1700 with no monitor. Go to newegg.com, and build an Athlon 1600+, 512 megs DDR RAM, NIC, SB Audigy sound, GeForce2 GTS video, case, keyboard, mouse, floppy, 40 gig hard drive, 16x CD-RW, 16x DVD-Rom drives. Approximately $700 including shipping. Run down to Walmart and buy a Radius 15" TFT monitor (which I cannt say enough good words about, especially with zero dead pixels) for $375.
For less than $1100, I now have a system that is at LEAST as powerful as a flat-panel iMac, though not as pretty. And it doesn't run OS X, which is a nice OS. But I still haven't had a single bluescreen on either of my home-built Win2k boxen. Now, for $400 more, I could have got a nice flat-panel iMac with the SuperDrive and all the sweet Apple consumer apps on it, but with this system, I can swap out the vidcard and sound card at well, and use DDR DIMMs instead of laptop SDRAM.
For what it's worth, I traded in the old iMac with $500 in cash for a bitchin' 1976 Mercury Cougar XR-7. I still have a couple of my old Macs laying around, but now that I can Q3/Wolfenstein all night on my ugly Windows box, waiting for the GeForce4 Ti 4200 to come out...
SlashSigTheorem: Humorous, Political, Critical, Constructive- If you have a
45% For
44% Against
11% Buchanan
Damn that butterfly ballot!
Remember "Bring 'em on"? *sigh
There's a funny thing about proxy votes. The more stock you own the more your vote means. Also, because this is a proxy vote the proxy has a mini vote and the majority choice is cast as a single vote from the proxy. If you've got 100 people behind a proxy and 40 vote against the merger, the proxy vote will be one for the merger. Add up enough proxies and you've got a sizable number of people voting against the merger. Fiorina is declaring victory far too soon in my opinion and according to most of the business papers I've been reading the opinion of many.
I don't get the projected numbers Fiorina has been throwing in everyone's faces. In all honesty she wants Compaq for production lines, some IP, and retail contracts with most notably Radio Shack. Between Radio Shack and WalMart Hewpaq would have a pretty big retail presence. Not everybody has a Best Buy, CompUSA, or Circuit City within an hour drive. They probably however have a RS or WalMart within an hour drive. If people are interested in a PC, retail chains are where they head to. However unlike the 2 + 2 = 5 numbers Fiorina is pulling out, HP and Compaq would not be expanding their markets. They would just consolodate shelf space. This doesn't lead to higher growth.
HP has gone from a company that actually progessed the state of technology to merely a competitor to Dell for presence on the desk. In the short term with decreased competition in retail space from Compaq, HP will do well. In the long run when the retail chains Hewpaq relies on start doing poorly they are going to suffer severly. In the said areas where HP and Compaq are prevelent, for some the only two choices, the market is going to become saturated very quickly due to the lack of demand. Sales of both companies' systems are already low, merging would just mean they would be collectively low even if their overall market penetration was greater than that of IBM. It's also funny how HP has twenty billion to spend on the Compaq merger yet needs to lay off 15,000 people. Next to go from HP will be their printer business at which point Dave Packard and Bill Hewlett will lead an army of zombies and demons out of Hell into Cupertino to make off with Carly and her minions.
I'm a loner Dottie, a Rebel.