NAMP Rules! HWP/CPQ Tools?
For a change, we had two big
stories this morning, and what a shocker, neither was bad news for Wall
Street! First, purchasing managers said U.S.
manufacturing picked up a bit of steam in August. Traders IMMEDIATELY turned
their hands from facing away from themselves to back towards themselves
(signaling a switch from selling, hands out, to buying, hands in). Why such a
quick and decided response? Thursdayâ€™s oversold condition was certainly a
contributing factor, but the NAPM was viewed
by many on the trading floor as perhaps a harbinger of a revival in the world’s
largest economy. Thatâ€™s the bottom line.
The other story was the Hewlett Packard
PowerRating) lovefest, which, if
we judge by the marketâ€™s reaction, was not as significant. Why was the
proposed $25 billion merger taken so complacently? Letâ€™s look at the pros vs. the cons, or vice versa:
Some of the negatives Hewlett Packard and Compaq have to overcome:
of merging two overlapping corporate bureaucracies
combined company will employ more than 145,000 workers for now. I would
expect the overlapping business to necessitate job cuts of 10% to 20%.
combined entity will have revenues of $87.4
billion — that is second only to IBM’s.
help the two companies shed costs to better compete with Dell Computer
merger will be able to offer computers, servers, printers and consulting
services. (Compaq currently gets 23% of its revenue from consulting
Compaq did the last big tech merger when it bought Digital Equipment in â€˜98
for $9.6 billion. The
merger will intensify
the pressure on Gateway
to merge, and Iâ€™ll have more about that situation in tomorrowâ€™s column.