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HP/Compaq Merger: Did Strategy Meet Original Expectations?

HP/Compaq Merger: Did the outcome of the strategy meet with original expectations, such as growth, EPS, price per share, or cost of diversification? Explain your answer.

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The HP/Compaq merger announced in September 2001 was to create an $87 billion global technology leader (www.hp.com). This merger was to bring about a new HP corporation that would offer the most complete set of IT products and services to their consumers. The merger was to place the new HP corporation as the number one company worldwide in servers, access devices (PC and hand-held), imaging and printing products, IT services, storage and management of software.

The merger was expected to produce cost synergies up to $2.5 billion yearly and improve the cost structure of the new HP Corporation (www.hp.com). The new HP would have a pro forma assets of $56.4 billion, yearly revenues of $87.4 billion and yearly operating earnings of $3.9 billion based on the last four fiscal reports of HP and Compaq. The new HP Corporation would operate in 160 countries and have about 145,000 employees.

According to Carly Fiorina, then chief executive officer of HP, "This is a decisive move that accelerates our strategy ...

Solution Summary

The solution discusses if strategy met original expectations.

$2.19