Unformatted text preview: venue loss of
5% of overall revenue and 12% contribution margin on lost revenues. For additional detail, please see page 27.
Source: HP management report to trustee / HP Position on Compaq Merger This document is authorized for use by Xiaolei Cong, from 11/30/2012 to 2/28/2013, in the course:
MGMT 237: 001 Management of Technology - Chaudhuri (Spring 2013), University of Pennsylvania.
Any unauthorized use or reproduction of this document is strictly prohibited. HP and Compaq Combined: In Search of Scale and Scope, SM-130 p. 31 Exhibit 3
Pre-Merger Projections of Post-Merger Operation Results Estimated 2004 Revenues Implied by HP Pre-Merger Proxy Material by Segment
Imaging and Printing HP Estimated Market
Growth Rate between 20002004 (AGR)i
10% Implied HPQ Projected
2004 Revenueii ($M)
25,856 Estimated 2004 Operating Margins Projected by HP Pre-Merger Proxy Material
HP Segment Operating Profit Margin
Services Note: HP did not estimate a post-merger operating profit figure for the Imaging and Printing segment. Estimated 2004 Earnings Projected by HP Pre-Merger Proxy Material
Imaging and Printing 2004 Projected Operating
2,482 Notes for above:
Source of HP’s pre-merger growth estimates is “HP Position on Compaq Merger,” HP, December 19, 2001, p. 10.
Annualized growth rate is used here.
HP projected 2004 earnings are comprised of:
revenue calculated by applying market growth estimates to 2001 actual earnings.
HP Position on Compaq Merger, p.7.
At the time pre-merger estimates were made, HP’s Enterprise group included software. The software segment has
since been spun out of the Enterprise group. Software is a money-losing segment for HP; in 2004 HP earned $922
million in the segment, but reported a loss from operations of $(145) million in the segment.
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