HP_and_Compaq_Combined__In_Search_of_Scale_and_Scope

Compaqs president and ceo eckhard pfeiffer who

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Unformatted text preview: so lost its position as America’s leading PC maker, having been passed by both Dell and HP in the retail market. Compaq’s president and CEO, Eckhard Pfeiffer who engineered the deal, was fired within a year of the purchase.8 If this experience did not scare off Fiorina, it probably gave HP’s investors pause. Perhaps fearful of the challenges in merging the two companies, but also corresponding with disappointing financial performance, investors stripped 36 percent off HP’s share price in the two months from the time the deal with PwC was announced until it was abandoned in November 2000. The all-equity deal became much more expensive in view of HP’s reduced share value. In addition, there were fears over the increased consultant turnover at PwC during the time the acquisition was in play. Explaining her decision to drop the deal, Fiorina said, “Given the current market environment, we are no longer confident that we can satisfy our value creation and employee retention objectives—and I am unwilling to subject the HP organization to the continuing distraction of pursuing this acquisition any further. We remain committed to aggressively growing our consulting capabilities, organically and possibly by acquisition, and are open to other business arrangements to achieve our goals.”9 Still, Fiorina was determined to grow HP’s presence in the lucrative services industry. In May 2001, HP and Accenture (formerly known as Anderson Consulting), announced an alliance to provide IT outsourcing services to enterprises. The companies would focus on migrating legacy mainframe applications to next generation architectures and platforms. The alliance combined Accenture’s industry, management, and technology expertise with HP’s technology, innovation, and operational services. The companies could offer enterprises the ability to design, build, run, and operate applications across a spectrum of outsourced IT lifecycle and infrastructure solutions. In September 2002, the technology and service...
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This document was uploaded on 02/16/2014 for the course MGMT 237 at UPenn.

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