Abstract

This is the third of a four-case series. The Compaq acquisition seems to have weakened Hewlett-Packard (HP) financially. Compaq has brought $600 million in long-term debt and $11 billion in short-term debt into HP's balance sheet, increasing HP's long- term debt more than six times and doubling its short-term debt. Fiorina seems to have bitten off more than she can chew by attempting a massive restructuring of a company of HP's size and complexity. Slowly but steadily, HP is finding it hard to deliver the synergies projected before the merger. As HP continues to lean heavily on its profitable printing business while its personal computer and server businesses struggle to generate profits, most analysts value HP's printing business as equal to the entire company value, leaving the rest of HP's businesses as next to nothing. As 2004 comes to an end, media speculation increases about the future of Fiorina and HP.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

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Keywords

Hewlett-Packard, HP, Compaq, Carly Fiorina, Acquisition, Takeover, Integration problems, Family, Corporate strategy, Restructuring