HP at Cultural Crossroads

Things became worse when the HP management announced that it would lay off another 6,000 workers in July 2001, the biggest reduction in the company's 64-year history. The management also sent memos saying that the layoffs would continue and that the volunteering for pay-cuts would not guarantee continued employment.

In September 2001, HP and Compaq Computer Corporation announced their merger⁵. According to company insiders, once the merger was implemented, Fiorina was likely to lay off another 15,000 to 30,000 employees as a part of a major cost saving drive. The merger was expected to yield cost savings upto $2.5 billion primarily because of layoffs.

Stanford engineers Bill Hewlett and David Packard founded HP in California in 1938 as an electronic instruments company. Its first product was a resistance-capacity audio oscillator, an electronic instrument used to test sound equipment. During the 1940s, HP's products rapidly gained acceptance among engineers and scientists. The company's growth was further aided by heavy purchases by the US government during the Second World War. As their business succeeded, the confidence of Hewlett and Packard increased. The founders, who shared some basic values, also hired and promoted like-minded people.