HP's Compaq Acquisition (C)

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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

Case Details:			Price:
Case Code	:	BSTA022	For delivery in electronic format: Rs. 300; For delivery through courier (within India): Rs. 300 + Rs. 25 for Shipping & Handling Charges Themes -
Case Length	:	04 Pages
Period	:	2000 - 2005
Pub Date	:	2005
Teaching Note	:	Not Available
Organization	:	Hewlett Packard, Compaq
Industry	:	Information Technology
Countries	:	USA

Abstract:

This is the third of a four-case series. The Compaq acquisition seems to have weakened Hewlett-Packard (HP) financially. Compaq has brought $600 million in long-term debt and $11 billion in short-term debt into HP's balance sheet, increasing HP's long- term debt more than six times and doubling its short-term debt. Fiorina seems to have bitten off more than she can chew by attempting a massive restructuring of a company of HP's size and complexity. Slowly but steadily, HP is finding it hard to deliver the synergies projected before the merger. As HP continues to lean heavily on its profitable printing business while its personal computer and server businesses struggle to generate profits, most analysts value HP's printing business as equal to the entire company value, leaving the rest of HP's businesses as next to nothing.

As 2004 comes to an end, media speculation increases about the future of Fiorina and HP.