HP SL5 Essay Example | Topics and Well Written Essays - 500 words

HP SL5 - Essay Example When Carly Fiorina replaced Lew Platt as CEO and president of Hewlett-Packard in 1999, the company had become a gigantic bureaucracy with business units doing their own thing. Profits had fallen along with employee productivity and customer satisfaction. In short, HP had become a technology laggard and was weak in marketing as well. Fiorina, the first female CEO of a Dow Jones-listed company, set out to transform HP from an engineering company to a leading technology solutions company focused on the marketplace. Hewlett-Packard Company was a leading global provider of computing and imaging solutions and services with total revenue of $45.2 billion, per its 2001financial report. The new CEO immediately went to work to reduce operational costs and to put in place a new strategic direction for the company. In September 2001, Hewlett Packard and Compaq, after months of negotiation, concluded a horizontal merger agreement to create a global technology leader, providing a complete set of IT products and services for both businesses and consumers, worth $87 billion in revenues. It was intended to compete with and perhaps edge out competitors Dell and IBM and become the foremost global player in servers, imaging and printing, and would belong to the top 3 in IT services, storage and management software. Fiorina said that recession and bitter competition from main rivals Dell and IBM left the two competitors HP and Compaq no choice but to consolidate to cut costs and streamline product categories, adding that the merger would result in a cost synergy of $2.5 billion a year. It was, she said, an effective way to deal with the cost pressure caused by Dell Computer. Inasmuch as the NT server business was doing poorly, the merger should address the problem of loss of revenues and momentum in generating sales and profits. The combination was to catapult the new company into industry leadership role with customers and