HP Compaq Merger

The HP downfall started in 2001 when HP under the guidance of CEO Carly Fiornia decided to merge with Compaq in a $25 billion dollar deal. Many large shareholders opposed the merger and the prime objection was that Compaq had many overlapping product lines and would get the company involved in the low-margin PC business that its main competitor, IBM, was already in the process of existing. The merger resulted in a loss of half of its market value and the company incurred heavy job losses. Since the merger, HP has endured numerous problems with failed initiatives, dubious acquisitions and has been plagued with ineffective management, including two major ethics scandals that have forced Chairwoman Patricia Dunn and CEO Mark Hurd to resign.