HP_and_Compaq_Combined__In_Search_of_Scale_and_Scope

Capellas phone call to fiorina came at the end of a

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Unformatted text preview: ess I was running as part of corporate strategy to analyze all combinations of different partnerships. There were very few that had a strategic, cultural, product, and customer fit like this one. When you get through with the analysis, it’s almost a no-brainer.” Capellas’ phone call to Fiorina came at the end of a tumultuous period for Compaq. The company never recovered from its purchase and failed integration of DEC in 1998. Compaq had been riding high when it bought the minicomputer pioneer for $9 billion. In 1998, Compaq was 10 Mark Veverka, “Carly’s Challenge,” Barron’s, August 13, 2001. Larry Dignan and Margaret Kane, “Wall Street Wait-and-See on Compaq Services,” CNET, August 10, 2001. 12 All quotes from Shane Robison are from the authors’ interview on September 18, 2003. Subsequent quotes from this interview will not be cited. 11 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. 7 growing at a heady 30 percent per year, twice the industry average and was the world’s largest maker of personal computers (PCs), ahead of IBM, Dell and HP. Just a year prior, Compaq had purchased Tandem, a maker of robust “fault-tolerant” servers that companies used to run critical applications, such as NASDAQ’s trading operations and airline booking services. However, by 2000, the merger had gone so badly that, as stated above, Eckhard Pfeiffer, Compaq’s CEO who engineered the deal, had been fired, the company’s share price lost about half of its value (this during the boom time for technology stocks), and the company itself lost $2 billion. Compaq’s board, failing to find an outsider willing to lead the company, promoted Compaq’s then COO, Michael Capellas, to the position of CEO. The acquisition had been an attempt to move Compaq into new growth area...
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This document was uploaded on 02/16/2014 for the course MGMT 237 at UPenn.

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