HP's Compaq Acquisition (A)
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Case Details:
Case Code : BSTA020
Case Length : 08 Pages
Period : 2000 - 2005
Organization : Hewlett-Packard (HP), Compaq
Pub Date : 2005
Teaching Note :Not Available
Countries : USA
Industry : Information Technology
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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.
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Introduction
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In September 2001, Hewlett-Packard (HP) acquired Compaq for $25 billion in stock (the final cost for HP was $19 billion), in what was the biggest ever buy-out in the history of the computer industry. The merged entity with operations in more than 160 countries with over 145,000 employees, offered a comprehensive range of information technology (IT) products and services.
The new company, which retained the HP name, had revenues of $87.4 billion about those of (industry leader IBM posted revenue of $88.396 billion in 2000). Carleton S. Fiorina (Fiorina) HP's Chairman and CEO became the Chairman and CEO of the new company.
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HP
In 1938, Stanford engineers Bill Hewlett and David Packard started HP in a garage in Palo Alto, California. Hewlett was the idea man, while Packard served as manager. Their first official meeting ended with no decision on exactly what to manufacture.
HP's first product was an audio oscillator. Demand for HP's electronic testing equipment during World War II took sales from $34,000 in 1940 to nearly $1 million just three years later. HP went public in 1957. HP established a marketing organization in Switzerland and a manufacturing plant in West Germany. HP entered the medical field in 1961 by acquiring Sanborn, and the analytical instrumentation business in 1965 with the purchase of F&M Scientific.
In 1972, HP introduced the world's first handheld scientific calculator. Under the leadership of John Young, who became CEO in 1978, HP introduced its first PCs, the first desktop mainframe, and the LaserJet printer. Its initial PCs were known for their rugged build. But as they were more expensive than rival versions, sales did not take off...
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