Its name is synonymous with the evolution of Silicon Valley and technological innovation. Its array of products and services is the broadest in the tech sector. Its brand is known and respected by consumers and corporations alike. And it pulled off the biggest-ever tech merger more than two years ago.
So why are people still asking some hard questions about the overall prospects for Hewlett Packard? The reason, say experts at Wharton and elsewhere, is that more than two years after its blockbuster acquisition of Compaq Computer, the reconfigured H-P remains a work in progress. Chairman and CEO Carleton (Carly) Fiorina has made strides in integrating the operations and cultures of the two companies. But if H-P's stock price is any indication of the company's prospects, investors still harbor concerns about whether the merger will ultimately strengthen the Palo Alto, Calif.-based company against its two chief competitors, Dell and IBM.
Wall Street raised eyebrows about the wisdom of the consolidation as soon as plans for it were disclosed three years ago. On Sept. 4, 2001, the day that HP and Compaq announced the merger, H-P's stock closed at $18.87, down sharply from $23.21 the previous trading day. On May 3, 2002, when the deal was officially consummated, the stock ended the day at $17.44. As of Sept. 21, 2004, the shares stood at $18.70 -- down 19% from the beginning of the year, according to a research report by Goldman Sachs. In what may be another sign of the times, Fortune magazine's just-released list of the 50 most powerful women in American business gives the top slot to eBay CEO Meg Whitman. Fiorina had won that honor every year since the list was started in 1998.
"The question is, 'What is the value of the combined assets of these companies?'" asks Harbir Singh, a Wharton management professor who specializes in studying mergers and acquisitions.
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