HP_and_Compaq_Combined__In_Search_of_Scale_and_Scope

HP_and_Compaq_Combined_In_Search_of_Scale_and_Scope

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Unformatted text preview: s giant IBM spent $3.5 billion to purchase the PwC group that Fiorina had left on the shelf. In late 2003, this did not seem to concern Fiorina. She said HP could have purchased PwC for $3.2 billion two weeks before IBM finally bought them for $3.5 billion. Her decision not to acquire the group did not mean she was backing away from services. In fact, she believed services had become even more important since the economic downturn, with customers demanding more from their technology suppliers and unwilling to make tradeoffs. In September 2003, recalling her experience with the proposed PwC merger, Fiorina discussed her rationale for letting the deal drop. She said: The deal at the price that was on the table at that point clearly was not going to work. But, you have to remember in December 2000 there were a couple of things going on that had since changed. We, along with other technology 7 “Compaq to Acquire Digital for $9.6 billion,” Compaq press release, January 26, 1998. “The Digital Dilemma,” The Economist, July 20, 2000. 9 “HP Reports Fourth Quarter and Full Year Results,” HP press release, November 13, 2000. 8 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. 4 companies, didn’t see the downturn coming as fast as it came. So, at that point in time, December 2000, for example most of the conventional wisdom was that the Unix market was going to grow at 15 percent. And so we got very heavily engaged with that company [PwC] to understand what they were thinking, what they were doing, what their cost models were like. You know, we found out, for example, that even in the heady days of summer of 2000 they were barely scraping by with a utilization rate at or near breakeven. Wh...
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This document was uploaded on 02/16/2014 for the course MGMT 237 at UPenn.

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