Post #7,612
9/4/01 12:37:04 AM
|
NYT (and all over): HP buys Compaq for US$25b stock
Heard this on the radio, it's already 200+ comments at [link|http://slashdot.org/article.pl?sid=01/09/04/0220234|Slashdot]. From The New York Times [link|http://archives.nytimes.com/2001/09/04/technology/04DEAL.html|Hewlett-Packard to Acquire Compaq in $25 Billion Deal]
September 4, 2001
Hewlett-Packard to Acquire Compaq in $25 Billion Deal
By ANDREW ROSS SORKIN and FLOYD NORRIS
Hewlett-Packard will announce today that it is acquiring Compaq Computer for $25 billion in stock in a bold move to grow as the computer business struggles with shrinking sales, executives close to the negotiations said last night. Interesting times. --
Karsten M. Self [link|mailto:kmself@ix.netcom.com|kmself@ix.netcom.com]
What part of "gestalt" don't you understand?
|
Post #7,616
9/4/01 3:34:17 AM
|
Had to get my nickel in on this one.
[link|http://www.aaxnet.com/news/B010903.html| Merger].
[link|http://www.aaxnet.com|AAx]
|
Post #7,619
9/4/01 6:32:31 AM
|
Merger makes little sense
Both HP and Compaq are lacking in services, this merger doesn't help. The rest of their product lines are very similar, PC's, UNIX Servers, what exactly is the gain here? These are 2 very similar companies merging. The Register is right on with their analysis ([link|http://www.theregister.co.uk/content/7/21445.html|http://www.theregis...7/21445.html])
"Companies usually merge for one of two reasons. Either they're a pair of poorly placed underdogs who decide to pool their assets because of straightforward economic consolidation. Or they're a pair of complementary companies, with diverse customers and products, which decide they'd be stronger fighting together than separately.
HP's acquisition of Compaq is neither one nor the other,
...
HP is essentially buying red ink, and a whole heap of trouble."
|
Post #7,624
9/4/01 10:12:05 AM
|
It makes sense for HP and Compaq management
and that seems to be all that matters these days. :-( It's hard to imagine the shareholders putting up enough of a fight to prevent the consumation.
What does Compaq have these days? They can't beat Dell on efficiency of production and distribution. They have server businesses based on processors that they've decided to kill (Alpha and MIPS). They've got a distribution channel based on resellers, so they can't build up their direct selling arm (though they tried several years ago). They can't make money selling a commodity product and don't have enough services business. Compaq's in big trouble.
HP has a name and a reputation for innovation. They're a powerhouse in printers. Their PC business is doing OK. They've got a strong relationship with Intel.
Compaq probably would be in a stronger position if it simply sold off its PC business to someone like Acer and concentrated on its enterprise business (especially services) and remained independent. HP seems desperate to grow larger to compete with IBM. This merger seems an awful lot like Compaq's purchase of DEC - HP's getting a weak player and it'll hurt them.
I think The Register writeup is compelling. It'll be interesting to see what happens. It's hard to imagine a bidding war developing for Compaq - that should tell HP something....
Cheers,
Scott.
|
Post #7,632
9/4/01 11:35:58 AM
|
Anything that stands to get . . .
. . those damned Presarios off the market is fine with me. I hate those things.
It looks like the Lexmark contract is going to toss a wrench in the works. Carly's going to have to make some serious concessions somewhere to get by that one.
Compaq's famous "channel distribution" was going south anyway, Capellas had successfully alienated just about everybody. Of course HP hasn't done a lot better recently.
I see continuing growth in market share for "white box" computers. "White box" has recently started seriously eating into server share as well as it's traditional desktops. About 40% of resellers report "white box" as their best selling desktop brand and about 25% for servers.
Reseller trade rag CRN declared "white box" dead a couple years ago when Compaq, HP and IBM dropped their prices to below what small builders could meet, but after a dip they came back - the advantages are just too overwhelming.
My "white box" machines are definitely more expensive (for quality and performance reasons) than what you can get at Frys or Best Buy, and I tell the customers that, but my sales are up. Too many people have had bad experiences with "major brands".
[link|http://www.aaxnet.com|AAx]
|
Post #7,637
9/4/01 12:10:31 PM
|
Yup look at HB Systems in Anchorage
priced at gateway and so much more reliable.
thanx,
bill
Our bureaucracy and our laws have turned the world into a clean, safe work camp. We are raising a nation of slaves.
Chuck Palahniuk
|
Post #7,625
9/4/01 10:27:26 AM
|
Its a stupidity attraction...
See, Compaq and HP both have a lot of stupidity.
Apparently, they got too much close to each other, and now its reached critical mass, and is coalesing into a Moronic Hole.. kind of like a black hole, but no intelligent thought gets out.
More seriously, the reason I say that, is that both company kind of muddle around, and miss their best points, and get by, with some collossal stupidity that takes back all the hard-won gains.
The two of them together, I suspect, will toss most of the thought, and the PHB thought process will be even more ingrained, and now there's more bureaucracy and power struggles and...
Addison
|
Post #7,626
9/4/01 10:29:43 AM
|
Bloomberg agrees.
HP's stock was down 12% this morning. [link|http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_bfgcgi_content99.ht&s2=ad_right1_topfin&bt=ad_position1_topfin&middle=ad_frame2_topfin&s=AO5TamRNiSGV3bGV0|This] story on Bloomberg has more details and comments. Together, Hewlett-Packard and Compaq would have had about 18 percent of the worldwide personal-computer market in the second quarter, according to Dataquest. By contrast, Dell held 13.1 percent of the PC market.
Fiorina, who considered buying PricewaterhouseCoopers LLC's consulting arm last year to bolster her company's services unit, may be most interested in Compaq's growth in that area. Still, about 55 percent of Compaq's services business is low-end technical support, Kumar said. That's not going to be much help to Fiorina, he said.
Services -- in particular outsourcing contracts, where companies turn over management of entire networks or computing departments -- have sustained IBM through fat and lean quarters, because multiyear contracts generate a steadier stream of revenue than hardware sales.
Before the second quarter, services had generated two-thirds of IBM's sales growth since 1994 -- $20 billion of the $32 billion total.
Consulting and outsourcing have been recent bright spots for Hewlett-Packard, which gets about 15 percent of its sales from services. While hardware demand dropped, consulting revenue rose 9 percent in the latest quarter, with outsourcing climbing 20 percent. Total services revenue in the period rose 3 percent to $1.88 billion. Compaq's services sales rose 6.8 percent in the second quarter to $1.94 billion, or 23 percent of total revenue.
[...]
``They have the fire power, but they'll run to major problems with suppliers,'' Tilney's Roe-Ely said. ``Compaq has a contract with Lexmark International Inc., which competes with HP.''
Compaq, which bought Digital Equipment Corp. in 1998, has stumbled in its efforts to reorganize the company around its services business. Since Capellas became CEO in 1999, he has restructured Compaq three different times. That doesn't bode well for Hewlett-Packard's chances, analysts said.
``Compaq bought Digital for services,'' said Gartner Group's Bertram. ``They haven't made a particularly good showing of services. Now H-P buys Compaq -- how much baggage is going to come with this?''
Fiorina, Capellas
Capellas and Fiorina, who sat next to each other at an Aug. 8 party celebrating the 20th anniversary of the first IBM PC, were named to their respective posts just days apart, with Fiorina starting July 19, 1999, and Capellas taking over Compaq July 22.
Hewlett-Packard stock has fallen 48 percent since the day before the company hired Fiorina, then a Lucent Technologies Inc. executive. Compaq shares have dropped 53 percent since the day before Capellas was promoted.
[...] It certainly doesn't look like the merger's going to have an easy pass in the press and the stock market. Cheers, Scott.
|
Post #7,656
9/4/01 4:12:01 PM
|
Anecdotal addendum..
(It's unwise statistically, but I think we all remember personal experiences much more than any actual stats)
My one run-in with Compaq re a failed MB in an early notebook (under warranty), got me all the way to talking with The Frenchman's er 'Executive Secretary' for some hints on wording of my letter to the Unreachable One. This after literally an hour+ of wasted time long distance, with high-priced successive managers reading me the mantra, it's against company policy.
Simply, I wanted to *pay* for the minor mb 'upgrade' of including a bloody CACHE! for this underpowered cpu. I knew they HAD more of the later mbs in stock than.. copies of my older one, and I had S/Ns and prices. No Dice. The Frenchman also bounced it back to previous hi-level droid woman - with smirking refusal. Customer is always Wrong, no matter what the logic. (My last Cpq (used) purchase ever, needless to say). I made that point clear to smirking droid, especially re my PO for 24 new laptops going to Toshiba (a baldfaced lie, but when in Rome...)
Toshiba OTOH, with a machine in final week of warranty: virtually rebuilt the sucker, paid for Fed-Ex pickup and return, to a nearby warr. station. (Called them too, to applaud).
I wonder how typical was my Cpq. experience.. but I can cheerfully and irrationally, simply: permanently avoid them.
(..nobody fucks with Paul Lazzaro!)
A.
|
Post #7,677
9/4/01 8:10:19 PM
|
Re: Didn't HP buy consulting arm of Price Waterhouse ?
That is the services link - In the 1990s Andersen Consulting (now accenture) & Price Waterhouse IT consulting, ruled the world. But IBM global services was created as a counter balance & grew to displace both of those companies.
The Internet hastened the demise of traditional IT consulting firms as they could all see the world was changing - most consulting companies (who started as accounting consultants or management consultnats) have recently sold off their old IT consulting arms.
Am not sure what this means for the proposed Compaq & HP merger.
Cheers
Doug Marker
|
Post #7,678
9/4/01 8:12:46 PM
|
Tried, failed.
[link|http://www.aaxnet.com|AAx]
|
Post #7,631
9/4/01 11:29:38 AM
|
Along those lines
"Why would anybody want to buy new PCs today?"
The answer used to be simple, at least in the MS world: you needed new HW to be able to keep up with the demands of the latest MS software. This has long been the quid-pro-quo driving the PC business: you preload our OS, and we'll both benefit from our forced SW/HW upgrade treadmill.
Now that XP and .NET are on the horizon, MS is building a revenue model far less dependent on growing OEM sales -- and will not need to offer OEMs the carrot of continual increasing demands on customer HW. I would be worried if I were a PC maker.
Giovanni
|
Post #7,620
9/4/01 8:16:09 AM
|
Fiorina is not good leadership material
People who want to be "celebrity CEOs" tend to be bad for business.
Compare how [link|http://www.jimcollins.com/ViewPub.asp?id=186|good leaders] would operate with how she is operating. Need I say more?
Cheers,
Ben
|
Post #7,650
9/4/01 3:41:50 PM
|
Damn Ben.. where do you *find* these links?
Mr. Jim Collins appears to comprehend fully - the magnitude of the differences between a ~ "business genius" and the tawdry bizness droids - like the odious example also cited: By contrast, consider the courtship of personal celebrity by the comparison CEOs. Scott Paper, the comparison company to
Kimberly-Clark, hired Al Dunlap as CEO \ufffd a man who would tell anyone who would listen (and many who would prefer not
to) about his accomplishments. After 19 months atop Scott Paper, Dunlap said in BusinessWeek: \ufffdThe Scott story will go
down in the annals of American business history as one of the most successful, quickest turnarounds ever. It makes other
turnarounds pale by comparison.\ufffd He personally accrued $100 million for 603 days of work at Scott Paper \ufffd or about
$165,000 per day \ufffd largely by slashing the workforce, halving the R&D budget, and putting the company on growth steroids
in preparation for sale. After selling off the company and pocketing his quick millions, Dunlap wrote an autobiography, in
which he boastfully dubbed himself \ufffdRambo in pinstripes.\ufffd It\ufffds hard to imagine Darwin Smith thinking, \ufffdHey, that Rambo
character reminds me of me,\ufffd let alone stating it publicly. A most illuminating essay; have to read more on his site. So much in this field is pure unadulterated TLA-BS yet, there are the occasional sentient beings amidst all the expensively-suited detritus. Thanks - good writing is always welcome.. A.
|
Post #7,667
9/4/01 4:58:13 PM
|
Chainsaw Al got his comeuppance...
[link|http://www.time.com/time/magazine/1998/dom/980629/business.chainsaw_al_get15.html|Chainsaw Al Gets The Chop] at Time magazine.
Some companies, for a time, benefitted from slashing of payroll, etc. But too many managers and Wall Street types took such tactics as the only way to turn a firm around. It's good to see that Chainsaw Al was taken down before he had a chance to retire as a guru of business. It's a shame he took so many people with him...
Cheers,
Scott.
|
Post #7,674
9/4/01 5:52:40 PM
|
Not really.. never, in Murica
He never had to "work for that $1/ year" until his mischief was undone. The lost jobs and screwed up lives - in integrated suffering? - is never repaid under Repo-based capitalism. Of course though - his Ego suffered a severe slash; perhaps more deadly for such creatures than a burst appendix (?)
Even the author - an unreconstructed Slash n'Burn addict - only thinks ~ Al went just a bit too far, but.. the IDEA is Good.. etc. Just another undereducated MBA with a soap box.
Aside: last Sunday's paper compared some English gaffes committed by "a particular Harvard 'C' Student" and similar kinds from (papers written at) Community Colleges. Task - separate out Which was Which (source). Hard.. the CCs generally did better.
Spare us all from further 'profess-ionals'. Please.
A.
|
Post #7,654
9/4/01 3:58:13 PM
|
Good article!
|
Post #7,694
9/4/01 10:48:40 PM
|
But even big-mouths can be a "4"
Lee Iacocca did get Chrysler out of a hump and into a growth mode. IOW, you don't have to have a 5 in place to grow *some*. A 5 would be nice, but lets be realistic.
________________
oop.ismad.com
|
Post #7,670
9/4/01 5:29:38 PM
|
Rousing raspberry from the stockmarket.
HP's offering less than Compaq was worth on Friday... [link|http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_bfgcgi_content99.ht&s2=ad_right1_topfin&bt=ad_position1_topfin&middle=ad_frame2_topfin&s=AO5U51BVJSGV3bGV0|This] is an update to the previous Bloomberg story. Compaq stockholders will get 0.6325 of a Hewlett-Packard share for each share held, valuing the company at $11.94 a share based on today's prices. That's 3.3 percent less than Compaq's close on Friday. Hewlett-Packard stockholders will own 64 percent of the combined company.
Hewlett-Packard shares fell $4.34 to $18.87 after touching $18.75, their lowest point since November 1996. The stock has lost 70 percent of its value in the past year. Compaq fell $1.27, or 10 percent, to $11.08 and has dropped 67 percent in the same period. IBM shares rose $1.54 to $101.49.
[...]
The companies each agreed to pay the other a $675 million fee for terminating the agreement, except if the acquisition falls apart because of government demands or other unusual circumstances, according to a filing with the Securities and Exchange Commission.
[...] Emphasis added. If there's any justice, Carly should be sweating now... Cheers, Scott.
|
Post #7,683
9/4/01 9:15:45 PM
|
Do I hear 20.3B? How about 19.7B? Now 18.9B?
Kind of like a reverse auction....
|
Post #7,697
9/4/01 10:57:06 PM
|
"Compackard"?
________________
oop.ismad.com
|
Post #7,702
9/5/01 1:05:50 AM
|
No - Hewlett Packard
Compaq now gets the same treatment they gave DEC. What goes around, comes around.
[link|http://www.aaxnet.com|AAx]
|
Post #7,704
9/5/01 1:41:57 AM
|
Ah.. I see. Then, when Sony
becomes hi-bidder for the remnants... after:
(synthesizing suggestions here, from local Illuminati)
Billy has been forbidden to own/run any bizness.
Bally has been forbidden to reproduce or, leave the house.
The Barbarians all must attend remedial civics classes, 40 hrs/wk.
The property has been returned to those scammed worldwide (at $20/hr of wasted repair efforts - on perennially, intentionally defective goods - since 1992)
Sony Nifty Doorways-Station shall rule!
...and never again shall mankind think of a window with a capital-W. This period in history shall become referred to as, the retrograde monopoly years and the W-word shall attain socially, the level of the once F-word (as people continue to both do and say, the latter, unconstrained.
I can hardly wait!
|
Post #7,730
9/5/01 12:55:22 PM
|
Conspiracy theory time
After thinking about this merger for a while, I came up with one semi-sane motivation.
One effect of this merger is to create a huge collection of obsolete platforms that are going to be phased out. Alpha, Mips, HP's old stuff, all of DEC's other stuff. These are all platforms waiting to be replaced with something.
What if Intel is secretly supporting part of this merger as a way to buy platform for IA-64? For Intel is makes perfect sense, HP is the one company that you can be sure will fully support IA-64 even if it doesn't turn out to be that good. By buying up the renments of old platforms, it can be sure that they all will have transistion plans over to IA-64. But doing so directly would be far outsides Intel's buisness charter.
Thus Intel makes some sort of secret agreement with HP to provide it support, money and cheap chips, and HP agrees to buy a bunch of dead platforms to make sure they all transistion to IA-64.
Jay Mehaffey
|
Post #7,779
9/6/01 1:32:58 AM
|
BTW, MIPS isn't dead -- probably outsells P IV
just not on the server side. MIPS is extemely popular in embedded apps, especially for network processors. There are some pretty cool MIPS chips out there, with multiple processors on a die. PowerPC is probably the second most popular architecture for network processors, and Intel is trying to get into this with their XScale.
ARM also outsells Intel by a wide margin -- they're extremely dominant in cell phones (e.g. Nokia cell phones use TI chips with an ARM core + a TI DSP core) and becoming so in PDAs.
And, yes, on the conspiracy theory, well, the Inquirer has also raised similar issues. I think the Itanic and its successors will be dogs, so what may happen instead is that Intel/HP/Compaq lose market share to IBM/Sun (high end) and white box servers (P IV Xeon, AMD Hammer) on the low end.
Tony
Who is more interested in the lastest DSP's (TI's 320C2810/12) than Intel's lastest CPU
|
