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HP Inc. Message Board

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  • chaunce_gardner chaunce_gardner Aug 13, 2004 12:21 PM Flag

    Carl barking up the wrong tree

    Re: Carl barking up the wrong tree-jcjb
    by: unclefulbert (81/M/Oxford, England) 08/13/04 12:04 pm
    Msg: 307485 of 307496

    Negative Effects
    Calling Hewlett-Packard a "great company," Hewlett urged shareholders to reject the merger, arguing that it had already negatively affected the value of HP and would do nothing to improve the company's future prospects.

    If the merger were to be successfully completed, HP shareholders would see their share of the company's valuable imaging and printing business diluted and their risk in the high-stakes, low-margin world of consumer PCs increased, Hewlett wrote. Such a move, he said, would leave HP a weaker company than before the merger.

    Further, he argued, the merger would not significantly improve the company's standing in the more profitable high-end server market, nor boost its consulting business.

    Hewlett also cited previous mergers between computer companies that did not pan out, including AT&T's acquisition of NCR and Compaq's purchase of Digital Equipment.

    "The complexity of putting two companies together, in a difficult economy, when each company is currently undergoing its own transition, presents daunting challenges and unacceptable risks," Hewlett wrote of the HP-Compaq proposal.

    Change of Focus
    In place of the merger, HP "needs to focus on what it does well, and to change and grow organically, with targeted tactical acquisitions--a strategy that has proven to be successful in the technology industry," he wrote.

    "In some respects," Hewlett wrote, "Hewlett-Packard was in need of a wake-up call and the reaction to this proposed merger has certainly provided one."

    When announced in early September 2001, the marriage of HP and Compaq was valued at $25 billion. Negative Wall Street reaction to the deal, however, sent both companies' share prices down and devalued the merger. If the deal goes through, as many as 15,000 employees could lose their jobs as a direct result

    Posted as a reply to: Msg 307480 by jcjbroe

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