| Hewlett-Packard (HWP)/Compaq (CPQ) Merger : Once viewed as saviors, HWP's Fiorina and CPQ's Capellas, had increasingly come under fire for failing to right their respective companies... What they couldn't do on their own, they now seek to do together... Over the holiday weekend, HWP announced that it would acquire CPQ in a stock-swap deal valued at $25 bln... Assuming regulatory approval, deal would create a technology giant with annual revenues north of $87 bln... While this is the kind of big, splashy, mega-merger that should breath life back into the dying tech sector, we're afraid it won't do much to resuscitate HWP/CPQ, as the deal was struck more out of desperation than inspiration... About the only positive Briefing.com sees from the deal is the projected annual cost savings of $2.5 bln, and even that is suspect, as cost savings are almost always overstated on deal day... Otherwise, this deal is one big mess... Independently, each company suffered from poor execution and no defined vision... Now management wants us to believe that together this lumbering behemoth, with over 145,000 employees in more than 160 countries, will somehow find its compass and become a lean, aggressive, innovator that dominates PC, printer, storage and server markets... Sorry, we're not buying - both figuratively and literally... In Briefing.com's opinion the merger creates an operational nightmare while offering little in the way of product/geographic expansion... As a headline grabber, deal gets an "A+." From an investment standpoint, we give it a "D." -- Robert Walberg, Briefing.com |
