Jerome,
Who gets to look silly in this matter????
1)The foundations of HWP for not following the advice of their board of directors.
The board of directors answers to the shareholders, not the other way around. Boards make bad decisions everyday and companies stumble and fail (Compaq's acquisition of DEC, Quantum's acquisition of DEC's hard drive products, etc., etc., etc,.etc., etc....). Boards are not infallible.
2)If the deal falls through it will give the impression that the Foundations are running the company.
I think someone has already pointed out that the shareholders are the ultimate authority. Think of them as the owners of the business, and think of the board members and executive staff as employees.
3) If CF leaves would any competent replacement want to take charge knowing the the Foundations will have the final say so on important decisions and bolt on those that they don't like.
Same answer as #1. Every executive and member of a board knows that they serve the shareholders. This is not a surprise to them. Every competent executive out there today knows it and understands it and already works under that constraint. Have you ever seen CALPERS (the retirement system for state employees in California) exercise their muscle? It's quite a sight. Companies typically salute very smartly when they speak.
CF did a very, very poor job of lining up her ducks on this one (or keeping them lined up, depending on how you want to phrase it). That's her job to do, since she's the one who wants this merger to go through. If she can't keep a coalition together, then she's at fault.
5)Would most of BOD leave since their advice is of minimal importance and of no real consequence?
They're more mature than that. Which isn't to say that some of them might not leave, having lost the confidence of the owners of the business. But it won't be an immature "you don't like me" reaction -- it'll be a more considered reaction. Who knows, maybe they'll get voted out before they can quit? Besides, if they can't do a good job on the board (as witnessed by the reaction of the major shareholders and street), maybe they shouldn't be there?
6) How many executives will leave with CF?
She hasn't brought in much of a team of her own. There's not a lot of loyalty to be lost. Very, very few will leave.
7) Suppose the stock price stays stuck or retreats from where it is. Will shareholders be happy?
No. But having watched so many large mergers fail, and few succeed, I suspect the shareholders will be happier than if it went through. As you probably suspect, I am against the merger. My biggest problem with it is that if you can't state the benefits of a merger in at most 2 or 3 sentences, it's probably a bad idea. Carly should have been able to say "we're buying them for their services business", or "we're buying them for their high-end systems business", so that all those "lazy" reporters could have gotten it from the start. There is no way that it should require a huge tome published months after the announcement of the deal to justify it. A successful acquisition should at least start by having everyone (reporters, analysts, employees, etc.) nodding their heads and saying "oh, yeah, that makes a lot of sense". Carly didn't do this and has botched the entire process.
If I were a cynical person, I'd say that she was doing this because it gets her out of the President's chair, allowing her to coast for a couple of years before she fires Capellas for non-performance, then spending another 6 months on a search for a replacement, then a couple more years of coasting before any heat comes her way again. Luckily, I'm not a cynical person.
CPQ will do fine without HWP and the risk is with HWP
No, CPQ won't. They're struggling badly (partly due to the their own screw-ups on their acquisitions). Nor am I sure that HP will do well either way. But we'll just have to wait to see who's right.
Dave
p.s. On another topic, I visitied a friend this morning who works for HP Labs. He took me to see Bill and Dave's old offices. They've been maintained just as they were when they worked there, with 60's looking furniture and mahogany paneling. Family photos are still on the shelves and walls. There's even a pile of change on Bill's desk (apparently he kept a pile on his desktop and current employees keep adding to it, though I'm not sure what they do with it when it grows too large). I really don't know how HP will do in the future, but it was an interesting experience to be there seeing a significant bit of history preserved. |
