...And our CEO Michael Capellas wrote this in his journal
(http://www.washingtonpost.com/wp-dyn/articles/A37364-2002Apr23.html)
"...Neal revealed that in late February or early March, Compaq CEO Michael Capellas wrote of a "sobering thought" in his personal journal. Noting that HP and Compaq were about to embark on a historic episode in business history, he wrote, "At our course and speed we will fail," according to Neal. Compaq said in statement that the entry was taken out of context and refers to a comment made at a meeting on one issue, not the entire HP deal...."
Captain - Your a trader not a long term holder investor like me. For trading, you need movement both up and down. You need certainty and a positive investor out look to get your quick gains. Both companies have been tough to trade. I am only looking for 10% growth per year (or a double in 7.2 years). I have only been investing in CPQ for about six years. I sold 1/2 of my CPQ two years ago at $30 (I doubled my origianl investment at $15 but am under water now on the 1/2 I held) as I thought this was fair value based on their lousy earnings growth performance but gave management the benefit of the doubt to "show me the money". A long term investor is looking at value, the potential to create free flow cash flows from assets (or combination of assets) and a good shrewd management that will capitalize on new market trends and position the company for "long term" sustained growth.
WW is looking at the long term (five years or more IMO) and if anybody has an ego it is CF. CF has something to prove to the shareholders... she must, she was hired to make changes.
Captain, the two CEO's in question are new to each organization. They have not (as yet) done anything within their management structure to sustain their business to the profitability of the past five years. What makes you think that this merger over the long term will be a positive to either the CPQ or HWP shareholder?
If you looked at WW's proposal for HWP (like spinning off the printer division) it increases overall shareholder value in a much more controllable form. It will take less time to see increased value and without as much risk.
That is not to say that a CPQ/HWP merger will not work. It will just take much more pruning (perhaps 30% layoffs) and more time. They may need to break up some of the service and enterprise businesses and at least restructure all of these divisions. It is a much more risky venture. I can see both sides. Finally, WW is the only BOD member of any fortune 500 company that has a vested interest to see that this thing works because of his large equity position.
I really do not think it was originally an ego issue. I just do not think CF listened to or consulted the HWP BOD or her senior management staff (as much as she should have). Now, however, you might be right that each party has been backed into their separate corners rather than coming to a meeting of the minds. There could be a combination of "the best" parts of each business with a spin off of the HWP printer side and perhaps other parts that would satisfy WW's concerns and CF's need to make changes.
Right now it is a pissing match and winner take all. These items should have been discussed in the BOD room not in the court room.
EKS |
