HP_and_Compaq_Combined__In_Search_of_Scale_and_Scope

2 30 137 enterpriseiv pcs services note hp did not

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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 HP Segment Enterprise PCs Services Imaging and Printing HP Estimated Market Growth Rate between 20002004 (AGR)i 12% 8% 12% 10% Implied HPQ Projected 2004 Revenueii ($M) 26,826 35,559 19,546 25,856 Estimated 2004 Operating Margins Projected by HP Pre-Merger Proxy Material HP Segment Operating Profit Margin (Pre-merger estimate)iii 9.2% 3.0% 13.7% Enterpriseiv PCs Services Note: HP did not estimate a post-merger operating profit figure for the Imaging and Printing segment. Estimated 2004 Earnings Projected by HP Pre-Merger Proxy Material HP Segment Enterprise PCs Services Imaging and Printing 2004 Projected Operating Earningsv ($M) 2,468 1,068 2,678 2,482 Notes for above: i 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. ii HP projected 2004 earnings are comprised of: revenue calculated by applying market growth estimates to 2001 actual earnings. iii HP Position on Compaq Merger, p.7. iv 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. v 2004 Proj...
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