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Case Study

HP Merger FAQ
Nate Orenstam
Sunday, March 17, 2002
|Related News: |
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You Had To Ask...
Here is the unofficial FAQ (Frequently Asked Questions) regarding the HP / Compaq Merger.
Why does this merger make strategic sense for HP and Compaq?
This merger creates an $87 billion global technology behemoth that can lose money for a long time while the management tries to figure out who to sell the combined company to.
I thought the plan was to run the new company with some new strategy?
Strategy, shmategy. What matters is getting the share price up. I'm sure you've heard of the "Greater Fool" theory of investment: you buy overpriced stock in the hope of selling to to someone to a bigger fool. Well, the same thing applies in mergers and acquisitions. After all, look at DEC and Tandem. Besides, the company's already spent far more promoting the merger than they've ever spent marketing the products.
Who approached who?
Technically the question should be "Who approached whom?"
Alright then, Mr. Smartypants, who approached whom?
Carly first noticed Michael 18 months ago while at a cocktail bar in Houston. Carly asked Michael if he'd like to explore licensing the HP-UX operating system for use in Compaq's line of servers. When Michael said "yes", Carly felt her heart go pitter patter like an HP Oscilliscope from years gone by. They had drinks and the discussion eventually led to more, ah, strategic possibilities.
Have they "done it" yet?
No. Carly and Michael are both very happily married and in they would never "do it" with another CEO until the merger is, well, consumated. Check back after the votes are tallied.
What about the photos I saw on the Internet?
While the participants look a lot like Carly and Michael, it...