We have relaunched: What's new at ZDNet Asia?

ZDNet / News / Business / Story

HP-Compaq merger, a year later

By Ian Fried, CNET News.com on May 2, 2003

Summary

It's been a year since Hewlett-Packard finalized its acquisition of Compaq Computer, but analysts and others are still asking whether the whole is bigger than the sum of the parts.

Events

Microsoft MSDN/Developer Event
25 Mar 2010

One Marina Boulevard, Microsoft Singapore

IT Architect Regional Conference Singapore 2010
20 - 21 Apr 2010

Singapore Management University, Singapore

The Internet Show 2010
21-22 Apr 2010

Suntec Singapore

It's been a year since Hewlett-Packard finalized its acquisition of Compaq Computer, but analysts and others are still asking whether the whole is bigger than the sum of the parts.

On the positive side, HP has successfully welded two former archrivals into a single, functioning organization, according to many. Although some European operations and the internal computer systems from the respective companies have yet to be fully integrated, HP has already realized many of the cost gains the company set out to achieve. The company has also landed high-profile accounts with companies such as the Bank of Ireland.

"Almost a year after we launched the merger of the two companies, we are at a point where we have met or exceeded I think every goal that we set associated with the merger," HP Services Chief Ann Livermore said in a recent interview. On the integration front, HP is winding down its effort with only 200 people working on merger-related issues, from some 2,000.

On the other hand, to echo Gertrude Stein, some wonder if there is enough "there" there to justify the merger. Analysts and critics say HP still has a long way to go to prove the strategic value of the deal, a question that has dogged the company since September 2001 when the merger was announced.

HP's share in key markets also continues to decline from the combined figures for the two companies from the year before. In the first quarter, Dell Computer overtook HP in shipments of PCs and Intel-based servers. Dell's shipments increased 24.4 percent worldwide during the quarter, typical for Dell. By contrast, HP's shipments dropped 5.7 percent and slipped 9.8 percent the quarter before.

In servers, HP rocketed to No. 1 with the Compaq acquisition, but it saw shipments decline slightly in 2002.

HP says it is encouraged by sequential gains in market share in several categories off the low-point established just after the merger. However, with Dell outgrowing HP in many areas, analysts say HP will have a tough time maintaining share against Dell in many key areas.

And Dell shows no signs of letting up.

"We don't believe our competitors are as prepared to be as cost aggressive as they need to," said Dell President Kevin Rollins at the Merrill Lynch Hardware Heaven conference this week. "We're stepping up cost aggression even more this year."

In evaluating how the merger stacks up thus far, a lot still depends on one's perspective.

Snip, snip
Cost cutting is where HP has gotten its highest marks. The company originally set out to achieve US$2.5 billion in annual cost savings by the end of 2004. Now it said it plans to reach US$3 billion by the end of this fiscal year, which is in October.

However, there has been growing concern that HP might be reaching the threshold. Merrill Lynch made that argument recently in downgrading HP, saying that the company was already getting push back from some Taiwanese motherboard suppliers.

Not so, says Jeff Clarke, the former Compaq chief financial officer that now heads HP's supply-chain operations. "There is continued room (for improvement) across our supply base."

For further savings, the company is turning to new techniques, such as forcing suppliers to bid against each other in electronic auctions. For example, HP already buys about 85 percent of its hard drives that way.

In all, HP bought US$2 billion worth of components through e-auctions last year, and Clarke promised the company will "do substantially more this year."

Talkback

Add your opinion

In order to post a comment, you need to be registered. (Sign In or register below)

Post your comment
Transform your business interactions with real-time voice, video and telepresence solutions.
Tech Vendor: Cisco

ZDNet Asia Live

whatever little understanding I have we 'll only progress toward end of the world if we use HPCs to lenthen life of human being. Huma...

2 hours 42 minutes ago by abhi32002@gmail.com on High computing promises elixir of life

Thanks for the knowledgeable article on SDDs. Allas...when all this reasearch will happen in Indian Universities. Hope the new bill on Fo...

2 hours 55 minutes ago by abhi32002@gmail.com on APAC HPC users eye solid-state drives

It was a good article. This brings a good opportunity for Indian IT firms to come up with new solutions in this field. HPC can become a b...

3 hours 14 minutes ago by abhi32002@gmail.com on High computing most-wanted job in Asia

COL KR DHARMADHIKARY(RETD) its very late to reply the link, but if it is still alive and looking for opportunity, i would like to know th...

7 hours 11 minutes ago by deb021280 on Education takes off in rural India, helped by PCs

It was just a matter of time until google was marginalised anyway. I'm afraid this will be forgotten in China very quickly. Still, it...

9 hours 16 minutes ago by robinsmith on Report: Google to leave China on April 10

High performance computing (HPC) most-wanted job in Asia http://bit.ly/9vFC3i (via @zdnetasia) #singapore

He doesn't care if her shoes are of glass, All he wants to see is a huge rack and nice a*s. Sleeping beauty's not awoken by true ...

9 hours 45 minutes ago by warlowdavies on One pair of 3D glasses to rule them all

RT @zdnetasia: EMC COO, Pat Gelsinger, on bridging gaps in the organization and its cloud ambitions in Asia. (cont) http://tl.gd/i5jjd

EMC COO, Pat Gelsinger, on bridging gaps in the organization and its cloud ambitions in Asia. http://bit.ly/9etOZW

Spoke to EMC COO, Pat Gelsinger, earlier, and here's the account of the interview: http://bit.ly/9etOZW

10 hours 27 minutes ago by kevinzdnetasia on topsy

Asian SMBs need to pay more attention to disaster recovery planning http://bit.ly/bDet08 via @zdnetasia

Asian SMBs need to pay more attention to disaster recovery planning http://bit.ly/bDet08

Experts: social media guidelines good for upcoming Youth Olympic Games, but focus on cooperation, not enforcement. http://bit.ly/d9M0BQ

10 hours 58 minutes ago by zdnetasia on topsy

Asian SMBs need to pay more attention to disaster recovery planning http://bit.ly/bDet08

11 hours 39625 seconds ago by kevinzdnetasia on topsy

ZDNet Asia features IBM collaboration roadmap story from LCTY Singapore - http://bit.ly/9CuSbZ #lotusknows

11 hours 53 minutes ago by lotusknows on topsy

[TECH] URL Shorteners slow Web redirection. - http://bit.ly/bySnWK @zdnetasia

URL shorteners are great but they can slow web redirection & you pray it would never go down http://bit.ly/bySnWK via @zdnetasia

Temasek Holdings eyeing tech stocks, indicating optimistic outlook on IT sector. http://bit.ly/aM7VwU

URL shorteners slow Web redirection. http://bit.ly/bySnWK

Chinese agencies cry foul over Google. http://bit.ly/by6rwV

Philippine antipiracy drive focuses on enterprises. http://bit.ly/aWryDC

Gartner: China to become world's fastest-growing enterprise software market. http://bit.ly/bqJTtb

all of sg's isps have been practising compulsory invisible proxy for all home subscribers at their backend since many years back alre...

1 day 55 minutes ago by melvinchia on Web filters mean bad news for business

it is not to good for china.
Proactol

1 day 40 minutes ago by nathonastle on Chinese ad partners beg Google for information

RT @zdnetasia: HP touts new products and management and productivity tools to address business computing pain points. http://bit.ly/dudgA6

For those with a computer science background, or interested in the high performance computing scene: http://bit.ly/9vFC3i

HP touts new products and management and productivity tools to address business computing pain points. http://bit.ly/dudgA6

Very good explanation of JMX

2 days 45 minutes ago by Babith B on Managing applications with JMX

The reaction to a report issued Tuesday by Flurry Analytics managed to completely overlook some interesting news--the Android-based Motorola Droid outsold the original iPhone over the same period of time following their respective launches--to focus instead on the sales numbers for the Nexus One.

2 days 48 minutes ago by lonemavericks on diggs

Another ZTE story....

2 days 50 minutes ago by Moderate Your Greed on Philippines opens bid for final 3G license

We at www.fifosys.com have also seen a growth in IT outsourcing and anticipate it as a growing field.

2 days 24 minutes ago by sarah Jane on Companies' outsourcing spend to increase

I agree with you. The iSiVaL is super portable and TVs can't expand their image size. I recorded a video that might bring some ideas to...

3 days 54 minutes ago by Jesse B Andersen on Buying a projector? Try an LED TV instead

hermm... he deserved it.. he shud not talk abt sensitive things like tat, well, he shud think twice before saying all those things, event...

3 days 32 minutes ago by ... on Facebook user charged in Malaysia

Password manager tools are potential security threat. Criminals who hack into the computer can use the password manager to log onto any s...

3 days 32 minutes ago by ohanae on What defaults should random password generators use?

I've found the cross platform utility unetbootin to be rather handy for this kind of thing as well.

3 days 6 minutes ago by Jim on Use Live USB Creator to install Fedora 12 from a USB stick

Keep up with ZDNet Asia

Linkedin Join our network

RSS Feeds Subscribe now

Newsletters Subscribe today

Twitter Follow us

Inside ZDNet Asia

Special Report: Tech Focus in 2010

Latest Videos on Tech Industry

Insight: Interviews with Newsmakers

Search for over 15,000 Tech Jobs in Asia

Find your Tech answers in TechGuides

IT Library: Over 60,000 IT papers at your fingertips

Download IT Priorities 2010 Report