OK ok I know this ain't CD Freaks news, but since it's quite big news I wanted to report it here.
By spending about 25 billion dollar (25000000000 dollar!) in shares, HP bought Compaq. We all know HP from their printers, scanners and CD writers and Compaq for their (crappy:) ) computers.
Together they will be the second biggest computer company worldwide. IBM still is nr. 1; Dell goes back to nr. 3 this way.
How will this affect the employee and the shareowner? Read on below:
Under the terms of the agreement, unanimously approved by both Boards of Directors, Compaq shareowners will receive 0.6325 of a newly issued HP share for each share of Compaq, giving the merger a current value of approximately $25 billion. HP shareowners will own approximately 64% and Compaq shareowners 36% of the merged company. The transaction, which is expected to be tax-free to shareowners of both companies for U.S. federal income tax purposes, will be accounted for as a purchase. |
The companies did not say whether they would be cutting any more jobs beyond what they separately have announced in the past several months. Compaq has said it is cutting 8,500 positions, leaving it with 62,800 jobs. Hewlett-Packard is slashing 6,000 jobs, giving it 87,000 positions.
Now the question always rises: is this good or is this bad. Frankly, I don't care. Almost nobody buys a Compaq home computer (I can't blame them) so that won't be any problem.
If HP can sell more products (doh) because of this "action" it could mean that prices will decrease. That's a good thing ofcourse. Problem is, it hasn't happened yet. Maybe prices will increase because HP spent 25 billion in shares? Who knows..... time will tell!
Source: HP.com
