Chinese manufacturer Lenovo Essays

Chinese manufacturer Lenovo Essays Chinese manufacturer Lenovo Essay Chinese manufacturer Lenovo Essay The merger meets opposition; On November 7, 2001 at 10 oclock that morning, Walter Hewlett, son of HP co-founder William Hewlett, called Ms. Fiorina, chairman and CEO of Hewlett-Packard Co. (HP). In their brief conversation, the co-founders son informed Fiorina that he and his family would publicly oppose the planned merger between Hewlett-Packard and Compaq. In addition, Hewlett told Fiorina that he would be issuing a news release within the hour to announce their decision. Then, just hours later, David Packard Jr., the oldest son of the other Hewlett-Packard co-founder, issued a statement announcing that he would also vote against the merger. (Hoopes, 2003) Suddenly, the future of HP-the company that created Silicon Valley-seemed to rest in the hands of heirs who had never wanted an active role in their fathers company. (Williams McWilliams, Family Affair: HP Deals Fate Rests with Skeptical Heirs, 2001) Had Fiorina failed to effectively sell the deal to Hewlett and Packard family members before making it public? Had she underestimated the power and influence these family members might have in determining the future of the company? (Hoopes, 2003) Despite the cold reception of the deal by many investors and analysts, once approved by the boards at both HP and Compaq, the merger could be stopped from going through in only a handful of ways. The deal could be terminated if the companies mutually agreed to cancel it, if either company experienced a material adverse change, or if regulators rejected it. In addition, either company could decide to break up the deal; however, it would have to pay the other company a $675 million termination fee to do so. Finally, and perhaps most importantly, as a stock transaction, the deal could be terminated if shareholders of either company rejected it. (Williams, Hewletts Reject Deal to Join HP, Compaq, 2001) On September 3, 2001, Walter Hewlett voted with the rest of HPs board to O. K. the proposed merger. However, in the months leading up to the boards vote, Hewlett had expressed concern about the deal and its impact on his familys charities. But just days before the vote, he learned that the merger agreement called for unanimous board approval in order to ensure the best possible shareholder reception. Believing that the board would find a way to approve the merger regardless of how he voted, Hewlett reluctantly cast his final vote in favor of the deal. (Hoopes, 2003) 4 CONCLUSION: Ask Carly Fiorina Although the merger met with poor reception from Wall Street and industry analysts, Fiorina did not back down. She argued that the merger would eliminate one player in an oversupplied PC marketplace. Fiorina often spoke out of context for true economic theory, she needed guidance, yet skirted topics key to point such as integration and merger activities and vertical integration versus horizontal integration. On the other hand, a horizontal merger, by its very definition, reduces the number of firms that compete in the product market place, so maybe she was right. The merger would also eventually improve HPs market share across the hardware line and double the size of HPs service unit-both essential steps in being able to compete with industry-giant IBM. In addition, Fiorina argued, the merger would create a full-service technology firm capable of doing everything from selling PCs and printers to setting up complex networks. The merger would eliminate redundant product groups and costs in marketing, advertising, and shipping, while at the same time preserving much of the two companies revenues. (Hoopes, 2003) To critics who questioned HPs motives for the deal, Fiorina emphasized that the chief driver for the HP-Compaq merger was competitive positioning. To those who questioned the chances that the merger would succeed, Fiorina pointed out that the distinguishing characteristic of successful mergers is the focus on consolidation, not diversification-exactly what HP planned to do after its merger with Compaq. (Hoopes, 2003) To Fiorinas defense, IBM sold its PC division to Chinese manufacturer Lenovo. The company did eventually do everything that she set out to do, only not under her leadership. I believe that she had the vision statement down; it was the mission statement that needed some work. She did not fail in providing vision; she simply did not succeed in her execution of the mission. HP provided pink slips to thousands of former Compaq, DEC, HP, and Tandem employees, and its stock price generally declined and profits did not perk up. Though the merger initially helped HP make it to the top as the number one PC maker, it soon lost the lead along with further market share to Dell. In addition, the merging of stagnant Compaq with HPs lucrative printing and imaging division was criticized as that overshadowed the latters profitability. In February 2005, the Board of Directors ousted Fiorina. Former Compaq CEO, Capellas, was mentioned by some as a potential successor, but several months afterwards, Mark Hurd was hired as CEO. (Flyer, 2008) In late 2005, HPQ seemed to find its feet under the new leadership of Mark Hurd. At this same time, Dell seemed to be faltering and HPQ took back the number one sales position. Hurd separated the PC division from the imaging and printing division. HPs PC segment has since been reinvigorated and now generates more revenue than the traditionally more profitable printers. (Wikpedia, Compaq, 2009) Most Compaq products have been re-branded with the HP nameplate, such as the companys market leading ProLiant server line, while the Compaq brand remains on only some consumer-orientated products, notably Compaq Presario PCs. HPs business computers line was discontinued in favor of the Compaq Evo line, which was rebranded HP Compaq. HPs Jornada PDAs were replaced by Compaq iPAQ PDAs, which were renamed HP iPAQ. (Wikpedia, Compaq, 2009) In May 2007, HP in a press release announced a new logo for their Compaq Division to be placed on the new model Compaq Presario. In 2008, HP dropped the Compaq name from its HP Compaq business notebooks and is now marketing them as the HP EliteBook and as of early 2009, the HP ProBook, leaving the Compaq name for HPs entry-level consumer platforms. (Wikpedia, Compaq, 2009) Bibliography AllBusiness. (1998, September 28). The most powerful woman in American business is Carly Florina. | Media Telecommunications Publishing from AllBusiness. com. Retrieved June 26, 2009, from AllBusiness. com: allbusiness. com/media-telecommunications/publishing-electronic-publishing/7697607-1. html Baye, M. R. (2009). Managerial Economics and Business Strategy. In M. R. Baye, Managerial Economics and Business Strategy (pp. 5-15, 36, 257). New York: The McGraw-Hill Companies, Inc. Fiorina, C. (2001, September 4). HP Press Release: Compaq. com Hewlett-Packard and Compaq Agree to Merge, Creating $87 Billion Global Technology Leader. Retrieved June 26, 2009, from HP: hp. com/hpinfo/newsroom/press/2001pmc/pr2001090402. html