Despite the fact that the market attributes virtually no value to its $19 billion acquisition of Houston-based Compaq Computer Corp two and a half years ago, Hewlett-Packard Co. announced today that it is combining its printing unit with its personal-computer division, effectively ending speculation for the time being that the company might sell various units of the company and refocus primarily on its profitable printing unit.
HP shares rose 1 cent to $19.96 in morning trading on the New York Stock Exchange. In comparison, HP’s closing stock price was $18.22 on May 6, 2002, the day on which the Compaq merger was consummated. This has led one sage analyst to remark that “HP paid $19 billion for the privilege of hardly making any money” in the personal computer business.
As noted in this earlier post, HP chairman Carly Fiorina publicly stated last month that the company’s board had considered breaking up the technology giant on three different occasions. However, Ms. Fiorina, who was the leading advocate of the Compaq acquistion, stated that the board each time decided the company’s diversified portfolio of technology products helped the company to moderate business fluctuations in the cyclical technology sector.
H’mm. I doubt any of those fluctuations in the technology sector to date would have cost HP the $19 billion it spent on Compaq.