Case 1 M A Merger HP Compaq First Final
Global Executive MBA – FGV (2015)
Course 303: Mergers and Acquisitions
Professor: Hsia Hua Sheng
Department: Accounting, Finance and Controls, Module: 3/2015
Assignment # 1
The merger between Hewlett Packard and Compaq
Local Team 2
Mark Hollenstein
Andre Nadjarian
Glasson Fonseca
Patricio Ducó
Jan 8th , 2014
1. What would a SWOT analysis of HP and Compaq reveal?
Hewlett Packard
Compaq
The main takeaway from this analysis is that the macro environment was tough, especially after the 9/11 attack and the technology industry was getting increasingly competitive and ever-changing. Therefore, even though both companies had their strengths, management was aware that the same business model would not last much longer. They were both clinging from very weak businesses: HP from the imaging and printing solutions that was already threatened by other brands and was evolving into digital solutions. Compaq was relying on a PC distribution model that was already showing signs of decay, especially shown by the negative operating margins they had even though they were the leaders in the market.
Clearly they both needed a profound change and understood that combining with a company with opposite strengths could be a viable solution to ensure continued growth and the needed skills to adapt their model for the future, where enterprise services was developing fast (as shown by IBM resurgence) and the PC industry demanded a low-cost distribution model.
2. What are the critical resources at HP? And at Compaq? Does Compaq complement HP?
For HP the critical resources were the printing and imaging solution, which was at that time a high demand market segment for which they had the leadership but had low growth potential. On the other hand they offered good computing products, like notebooks, servers, desktops and storage products but has an inefficient distribution model. Finally, an IT service was a new segment that was under development. The last two
Course 303: Mergers and Acquisitions
Professor: Hsia Hua Sheng
Department: Accounting, Finance and Controls, Module: 3/2015
Assignment # 1
The merger between Hewlett Packard and Compaq
Local Team 2
Mark Hollenstein
Andre Nadjarian
Glasson Fonseca
Patricio Ducó
Jan 8th , 2014
1. What would a SWOT analysis of HP and Compaq reveal?
Hewlett Packard
Compaq
The main takeaway from this analysis is that the macro environment was tough, especially after the 9/11 attack and the technology industry was getting increasingly competitive and ever-changing. Therefore, even though both companies had their strengths, management was aware that the same business model would not last much longer. They were both clinging from very weak businesses: HP from the imaging and printing solutions that was already threatened by other brands and was evolving into digital solutions. Compaq was relying on a PC distribution model that was already showing signs of decay, especially shown by the negative operating margins they had even though they were the leaders in the market.
Clearly they both needed a profound change and understood that combining with a company with opposite strengths could be a viable solution to ensure continued growth and the needed skills to adapt their model for the future, where enterprise services was developing fast (as shown by IBM resurgence) and the PC industry demanded a low-cost distribution model.
2. What are the critical resources at HP? And at Compaq? Does Compaq complement HP?
For HP the critical resources were the printing and imaging solution, which was at that time a high demand market segment for which they had the leadership but had low growth potential. On the other hand they offered good computing products, like notebooks, servers, desktops and storage products but has an inefficient distribution model. Finally, an IT service was a new segment that was under development. The last two