Holy Crap! I just read this over at www.Anandtech.com It looks like HP will be buying Compaq for 25 billion! In my opinion, both companies suck. But 25 billion? Is compaq really worth that much?

If HP and Compaq employees thought they saw layoffs before, they are in for a new world of hurt.

The combination takes out a major competitor for both and gives executives something to accomplish since they are doing so badly in the marketplace right now.

-DavidCPA

Compaq is the industry leader. Both in terms of computer sales... and consumer disatisfaction. But I think there's no question whether or not it's worth taking over, and thus taking out, your biggest rival... especially during a slump. Also it's 25 billion dollars *in stock*. Those last two words are key.

-Andrew

25 BILLION dollars !!! Imagine the games you can make with that money! AND the movies and still buy a nice house near a lake to go fishing and power-skiing on! sorry, just a lot of money to think about. okay, im awake now.

etc

Ah, stocks. The real world version of monopoly-money :)

I currently own an HP. Last time I make THAT mistake. The sad part it, I viewed HP as just a "little" better than Compaq.

When I was in high school, the head honcho/founder of Compaq, Rod Canion, moved into the neighborhood (well, adjacent to it and built a new mansion there). I understand he was one of the 3 former TI engineers who designed the first PC clone to start Compaq - I assume a pretty intelligent guy.

My younger buddies convinced me to go to the school during the summer to watch cheerleader tryouts because his daughter would be starting high school and was a legendary beauty. They were right - she had platinum blonde hair and was fully 'developed' into a young woman. I'm sure she was the one who there were rumors that she was dating a 'college guy', and they might have been true.

The punchline was her name. Smart dad + beautiful daughter = the best porn star name I've ever heard.

Candy Canion.

15,000 layoffs will happen when they merge.

-Monkeybutt

I am confused by this - to me they are the same company. Middle of the road desktop pcs with a few good servers. HP has become the packard-bell of the retail market, compaq wishes it was that.

Isn't this just going to be one less computer manufacturer which will still be competing against dell and ibm? Buy Dell stock.

Chet

I refuse to go anywhere near Compaq PCs after finding out that they require proprietary software. *shudder* I guess HP now inherits that distinction. (heh)

- Alan

I haven't had a chance to read the details of the announcement: will HP retain the Compaq branding? What will be merged and what will remain differentiated?

I wouldn't touch a HP or a Compaq if someone paid me. Many of our products die when connected to one of these abominations.

Now Dell on the hand make very nice computers. Plus we never have any trouble with them. Dell PC's love third party peripherals.

Is Dell a brick n' mortar retail company? I thought they only did the phone order/online thing. If they aren't retail, HP probably doesn't consider them a "shelf" competitor like Compaq and IBM. I'd be VERY surprised if HP dissolved the Compaq name btw. It's too entrenched to just throw away like that, plus rebranding is very pricey.

Anyway, I mentioned earlier, Compaq was ranked worst computer company by that U of Michigan survey. Dell was marked best. But, the computer business was ranked 2nd worst overall business... right behind cable (where AT&T Broadband took the booby prize for lowest rank company in America).

I heard all this on Public Talk Radio btw, I have no documentation.

-Andrew

Lackey,
In case you hadn't found the details yet:

http://cnnfn.cnn.com/2001/09/04/deals/hp_compaq/

>I'd be VERY surprised if HP dissolved the Compaq name btw. It's too entrenched to just throw away like that, plus rebranding is very pricey

Well, HP is a "decent" brand itself, having created Silicon Valley and all. But I agree that I'd be surprised if HP got rid of the Compaq brand -- it's a more valuable brand than HP in the retail PC market. Compaq makes terrible computers, however, and HP isn't much better.

>Isn't this just going to be one less computer manufacturer which will still be competing against dell and ibm? Buy Dell stock

Heh, that's exactly what I was thinking. This acquisition is terrible news for HP stockholders, and employees. The removal of a competitor in the PC market benefits better companies, like Dell, more than it benefits HP (which will also assume some horrific integration costs). Other investors apparently felt the same way, since the stock lost 20% of its value today.

Stefan

And then... Jim showed up with "the rest of the story"...

Well, as most of you know (and all of you do now, I guess) I'm a system administrator for the post office. The post office originally had a purchasing and service agreement with Digital. In order to obtain that, and take over the contract themselves, Compaq absorbed Digital some years ago.

Well, Compaq has had the service and hardware contract with us for a few years now, and as I understand it the service contract alone is worth $1 billion in REAL CASH. Not stock. Now, add hardware in there and we're talking about $2-3 billion easy. Not monopoly money, but actual green.

Well, this year... this month actually... that contract is up for re-bid. The competitors are: Dell, Gateway, Compaq, and HP. The stipulation is that they provide 2 things:

1. Most-favored-customer status
2. (the kicker) the winner MUST provide service and support (to include picking up the warranties) for all currently deployed equipment.

Well... those of you who know Compaq understand how that stuff is 110% proprietary. Nobody can possibly handle item #2 except Compaq themselves - because they're certainly not going to wholesale parts out to Gateway or Dell, are they? So, nobody can promise to comply with that.

Unless... you... buy... Compaq.

DING!

HP wins. End of story.

So, they're looking at a guaranteed $2-3 billion over the duration of a 5-year untouchable contract deal. So, if we estimate low, let's call it 5x2 = $10 billion in real money for an expenditure of $25 billion in stock.

And now you know... the rest of the story.

Is disclosing these sorts of things SECC regulated? Under their ludicrous standards, I think it actually is.

What's SECC?

If you mean my post, there's no info there that wasn't present in the "Postal Bulletin" press release on the subject about a month ago - other than the recent news and connecting the dots.

I'm sure there are probably a variety of other factors that went into this decision... but I also think the postal contract - big as it is - probably was one of the big ones.

Whoops, I added an extra C. The Security & Exchange Commission.