Welcome To Our Presentation

Presentation Topics
The Hewlett-Packard( hp) and Compaq Merger

Presented To
Benazir Rahman Lecturer Northern University Bangladesh

Presented By
NAME
Md. Rashedur Rahman Md. Sahriar Nafiz Md. Israfil Md. Nazmul Hasan

ID#
BBA 110170216 BBA 110170193 BBA 110170221

About Hp
Hewlett-Packard Company -- a leading global provider of computing and imaging solutions and services -- is focused on making technology and its benefits accessible to all. HP had total revenue from continuing operations of $48.8 billion in its 2000 fiscal year Well-respected systems vendor Smaller, but worthy competitor to IBM Competes mainly in the hardware business with desktops and servers

About Compaq
Compaq Computer Corporation is a leading global provider of enterprise technology and solutions. Compaq designs, develops, manufactures and markets hardware, software, solutions and services, including industry-leading enterprise storage and computing solutions.

Compaq sales leveled off with added competition from Dell Compaq was best known for its personal computer offerings

Merger Dates
September 4, 2001 - HP and Compaq announced a definitive merger agreement to create an $87 billion global technology leader. Eights months later on May 3, 2002 HP and Compaq officially merge

Reasons for Merger

To compete with IBM and other companies The combined services business will have 65,000 services professionals vs. 100,000plus for IBM Reduce Costs Generate cost synergies reaching $2.5 billion annually improved cost structure.

Reasons for Merger

Expected annual revenue of $87.4 billion Neck and neck with IBM in Tech company Cross selling to both companies customers Build better internet systems with Compaqs Technology. Top market share in printers, PCs, and storage Second-largest server business and thirdlargest tech-services organization

Transaction Summary
Structure Stock-for-stock merger

Exchange Ratio Current Value Ownership Accounting

0.6325 of an HP share per Compaq share Approximately $25 billion HP shareholders 64%; Compaq shareholders 36% Purchase

Expected Closing

First half of 2002

Benefits Of Merger
Creates an $87 billion global technology leader, with the industry's most complete set of IT products and services for both businesses and consumers. New HP would be the #1 global player in servers, imaging & printing, and access devices (PCs & handhelds), as well as Top 3 player in IT services, storage and management software. The combination furthers each company's commitment to open, market-unifying systems and architectures and aggressive direct and channel distribution models. Combined company can create substantial shareowner value through significant cost structure improvements and access to new growth opportunities.

Benefits Of Merger
Transaction expected to be substantially accretive to pro forma EPS in first full year of combined operations. The merger is expected to generate cost synergies of approximately $2.0 billion in fiscal 2003, the first full year of operations; fully realized synergies are expected to reach a run rate of approximately $2.5 billion by midfiscal 2004. New HP would have operations in more than 160 countries and over 145,000 employees.

Total Earnings In a Chart

Key Facts (last 4 qtrs): Total Revenues Assets HP $47.0 billion $32.4 billion Compaq $40.4 billion $23.9 billion Pro Forma Combined $87.4 billion $56.4 billion

Operating Earnings

$2.1 billion

$1.9 billion

$3.9 billion

SWOT Analysis
Strengths
Compaq-Server category and overall storage HP High End Storage Strong Brand recognition

Weakness
Developing a direct distribution model Consulting and outsourcing Compaq- Printers

SWOT Analysis
Opportunities
Merger could improve economics & Innovation Market growth in IT Services

Threats
Dell increases pressure in the low-end server market IBM, Dell and new entrants erode more market share

Recommendation
After paying $5.4 billion to finance a merger with Digital Equipment, Compaq eliminated overlap by cutting thousands of jobs worldwide The combined services business will have 65,000 services professionals vs. 100,000plus for IBM This Merger created a strong Brand This merger increase the growth of IT Services

Recommendation
This Merger Improve Financial Performance Generate cost synergies reaching $2.5 billion annually improved cost structure.

Thank you