Feeds

Sircam merger will ruin us – Hewlett Jr

Walter goes to war

  • alert
  • submit to reddit

Providing a secure and efficient Helpdesk

Walter Hewlett Jr has delivered a devastating 70-page rebuttal to the proposed Sircam merger between HP and Compaq.

The Schedule 14 notice was prepared by the San Francisco-based investment advisors Friedman Fleischer and Lowe, and debunks the official line of the HP and Compaq boards with a bombardment of statistics and historical data.

Hewlett Jr says the Sircam merger has already wiped $18 billion off the combined values of the two companies since August 31, and thinks the worst is yet to come.

Hewlett has already outlined his three main objections to the merger: he doesn't want HP's lucrative printer and imaging business diluted, it's risky and Compaq is the wrong company to grow HP's services business.

Mergers often leave the combined with less than it expected, argue FF&L, on behalf of Hewlett. Among the many precedents cited are HP's acquisition of Apollo in 1989 which saw Sun claw pole position in the workstation market away from the latter, and which ironically, resulted in Ed Zander leaving Apollo for Sun.

It cites research suggesting half of all mergers fail to produce any net gains.

And it makes much of former Compaq chairman and kingmaker Ben Rosen's now notorious comment, made in 1991, that "the main beneficiaries of mergers in the computer industry have been competitors".

In detail, FF&L stress the risks and only marginal gain that the merger would bring to HP. For example, they argue that much of Compaq's server revenue is at the low-end, which is vulnerable to Dell, and an area where margins are shrinking. Neither HP nor Compaq has rode the Linux wave as successfully as IBM or Dell, it points out.

Although FF&L praise Compaq's storage position, they point out that Q's $2 billion business added to HP's $1.2 billion storage business combines to less than 4 per cent of revenues for the combined Paqard.

But the most damning, and possibly damaging strike is against merging the services business. HP's Fiorina failed to buy PWC's services arm, and cites Compaq's as one of the prime reasons for the merger.

"Compaq and HP services combined look like Compaq and HP services alone," they note. The DEC and Tandem services revenue is "small and shrinking".

You can read the Friedman Fleischer and Lowe deliberations here.

Don't listen to them - they only work here

HP staff continue to oppose the merger by two to one, according to a survey carried out by, er... HP, and reported by USA Toady here. HP says it is "not representative," reports the Toady®

Related Stories

What feud? HP boss turns on media
Get Walter! Hewlett Jr. smeared to save Compaq merger
Packard family naysays Compaq merger
SirCam merger gets personal: Valley aristos send Compaq paq-ing
Hewlett family hates Compaq merger (true)
Revealed! The secret memos that ignited the HP/Compaq merger

Providing a secure and efficient Helpdesk

More from The Register

next story
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
Apple CEO Tim Cook: TV is TERRIBLE and stuck in the 1970s
The iKing thinks telly is far too fiddly and ugly – basically, iTunes
Huawei ditches new Windows Phone mobe plans, blames poor sales
Giganto mobe firm slams door shut on Microsoft. OH DEAR
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Found inside ISIS terror chap's laptop: CELINE DION tunes
REPORT: Stash of terrorist material found in Syria Dell box
Show us your Five-Eyes SECRETS says Privacy International
Refusal to disclose GCHQ canteen menus and prices triggers Euro Human Rights Court action
prev story

Whitepapers

Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.
Saudi Petroleum chooses Tegile storage solution
A storage solution that addresses company growth and performance for business-critical applications of caseware archive and search along with other key operational systems.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.
Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.