It looks as if “by the slimmest of margins” the HP shareholders have approved the merger of HP and Compaq, and the new company should begin operations in a few weeks (given the official count still shows a majority in favor of merging, and if they don’t perform the count in Florida).
Plenty of reasons for and against have been thrown at investors, and plenty of insults have been thrown at the players by each other, but all the nonsence aside, is this a good idea?
Those in favor (Carly) say this new HP will be a more formidable competitor, and that bringing in Compaq will help HP’s PC business. Services were also an iportant aspect (competing in the Service sector).
Those against (Walter) say this merger would dilute the value of HP shares, and bring more of a low-margin business into HP. Also the culture gap may be too big to bridge.
Way say you, Dopers? Who knows what kind of ecomomic times are ahead - is the biggest merger in the tech sector a good idea now that it looks like a go?
I thought that the initial proxy count showed a 9 to 1 vote for the merger–in other words, the Hewlett and Packard families were about the only ones who voted against it.
I think what most stockholders realized is that both companies have one foot in the grave now, but they have a chance together: consolidating their product lines means no longer splitting their collective share of the market between them; their overall size makes them stronger; they can select the best products from each and eliminate less profitable/less popular product lines. In short, all the advantages of ganging up on Dell with none of the antitrust worries.
That said, it can still go horribly awry, and they can drown while clutching each other. Much more depends upon the execution of the merger than the fact of it, and that’s where the real test for the executives comes. If the consolidation goes smoothly, the combined firm will be stronger than before and have a renewed lease on life; if it goes badly, then a lot of good products and expertise will disappear.
I’ve heard various scenarios, and the one I favor is that the Compaq lines take the low end (desktops, etc.), while HP keeps the high end (servers and mainframes). IBM’s PC division has been on deathwatch forever, and this may be the coup de grace, which leaves HPAQ vs. Dell as a battle of the titans, where HPAQ is far better suited for it than either separately.
hansel, that was teh Compaq shareholder vote. They approved with ~ 9 to 1 majority. HP shareholders were split dowm the middle, and the official count is still ongoing.
That is one of the reasons from the pro-merger camp. Economies of scale, and all…
That said, it can still go horribly awry, and they can drown while clutching each other. Much more depends upon the execution of the merger than the fact of it, and that’s where the real test for the executives comes. If the consolidation goes smoothly, the combined firm will be stronger than before and have a renewed lease on life; if it goes badly, then a lot of good products and expertise will disappear.
Well, this is a division where they have agreed to take a loss just to keep PCs in their product line. I think they have lost money there, but are not really on “death watch” since the loss was no great surprise. They do make quite a bit on Services, and that keeps them very profitable.
Yeah, HPAQ can compete better with Dell, just because of the added pull they’ll get with suppliers. But Dell still has the direct model perfected, while HP and Compaq both only got a foot in the door recently.