At the end of 2003, the global IT industry experienced dramatic expansion and ups and downs, and gradually returned to rationality from a high-growth, high-consumption, high-expenditure, and high-repetition operating mode.
A large number of electronic products have filled the world market in just a few years, and have gradually entered a stage of orderly growth in stock.
After the barbaric development, the international market has entered a stage of rational competition. Higher management levels, more reasonable resource allocation, and stronger market competitiveness combinations have gradually eliminated weaker competitors and transitioned to the era of multinational giants.
Under such circumstances, Hewlett-Packard and Compaq Computer joined forces in 2001, which became a remarkable event in the global IT industry.
Two years have passed, how is the situation now?
Wall Street insiders are not optimistic about this merger and acquisition of a powerful alliance in the IT industry, because the product lines of the two companies are highly overlapping, and they are pursuing a simple superposition of quantity rather than complementary advantages in product areas.
On September 5, after the merger was announced, HP's shares fell 18.7% per share on the New York Stock Exchange to close at $18.87. Compaq's shares fell 10.28% per share to close at $11.08.
This sap opening seems to indicate a bumpy future for the new company, which is definitely not optimistic.
As of the end of 2003
The organizations and product lines of these two companies overlap very seriously. After a large number of layoffs, cutting expenses means that many suppliers, production lines and manufacturing plants with overlapping channels will be compressed, even causing chaos in the entire sales market.
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Reflected in the financial report, the combined turnover of the two dropped sharply from US$82 billion in 2001 to US$57.7 billion in 2003. The profit amount was more than half lower than before due to the large-scale economic compensation for laid-off workers, barely maintaining a meager profit situation.
face adverse situation
HP officially announced its "New Growth Plan" at the end of 2003, planning to continue cutting 14,500 employees within six fiscal quarters, accounting for 10% of the total number of employees. It hopes to save US$1.7 billion annually and further improve the company's operating efficiency.
Why does such an unfavorable situation occur?
This is because Royal Fund has taken targeted measures to suppress the survival space of Hewlett-Packard's computer brands by drastically cutting prices and increasing distribution of Dell computers, which ranks fourth in the market.
Atlantic Business Machines also lowered the prices of its low-end series of computers, including desktops and notebooks, in an effort to target Hewlett-Packard's computer products and printer products.
The two work together to squeeze the market space, one from the top down and the other from the bottom up, and use the cost advantage of large-scale production to attack competitors, and the results are very significant.
When it comes to price competition, Royal Fund has never been afraid of anyone, backed by the Chinese market.
The price reduction of Dell Computer only cut the profit margin in half, and it can still maintain a net profit margin of 12%. Poor HP cannot do this. The loss range of its entire series of computer products reaches 8% to 10%. It must rely on high profit margins.
Enterprise server products make up.
At the end of 2003, another major event happened in the global IT industry.
After more than three months of negotiations, IBM in the United States and China Fantasy Group finally reached an agreement. Fantasy Group acquired IBM's personal computer business in the form of cash, stock and debt repayment.
China Fantasy Group will own 45% of the new company's equity, and IBM of the United States will own 18% of the equity, thus giving birth to the third giant company in the PC industry, second only to Atlantic Business Machines Company, which ranks first, and Hewlett-Packard, which ranks second.
Ahead of fourth-placed Dell Computer.
In 2003, after the global computer market entered a pattern of stock competition, the Chinese computer market was still in a state of explosive growth.
The annual sales of 13 million computers were 19.2% higher than the same period in 2002, and the sales amount was 96.7 billion yuan, an increase of 7.2% compared with the same period of the previous year.
China's domestic brand computer competition has entered a state of fragmentation. Computer brands such as Qixi and Shida have become yesterday's news. Domestic brands such as Lenovo, Panda, Founder, and Glitter have emerged one after another, showing their strong competitive strength.
in the global market
With more than ten years of good reputation, OPPO brand computers still dominate the high-end market, accounting for 23% of the market share, and have unparalleled brand advantages.
Among the top ten manufacturers in the world, HP occupies 15.2%, IBM occupies 7.1%, Dell occupies 6.3%, Toshiba occupies 3.3%, Gree occupies 2.9%, Acer occupies 2.3%, NEC occupies 2.3%, Lenovo occupies 2.1%, and Founder occupies 1.7%.
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Although IBM brand computer revenue reached US$9.6 billion in 2003 and computer product shipments reached 100 million units, it was the third consecutive year of losses, with a full-year loss of US$478 million.
This is because the cost of IBM brand computer production plants in the United States is too high and cannot cope with the increasingly fierce market competition and price competition.
After Dell Computer initiated a price war, IBM decisively surrendered and exited the personal computer market.
What is disgusting is that IBM ignored the olive branch offered by Royal Fund and did not want the IBM computer brand to belong to Royal Fund, so it chose Fantasy Group as a partner.
After a short period of negotiation
In the end, a merger and acquisition deal was reached with Fantasy Group at a bargain price of US$1.25 billion, which included US$350 million in cash, US$350 million in stock, and US$550 million in debt.
After Fantasy Group announced its acquisition of IBM's personal computer business, the market reaction was completely different.
On the New York Stock Exchange, IBM stock price rose slightly by 0.57% to close at $96.65 per share.
On the Hong Kong Stock Exchange, Fantasy Group's stock fluctuated significantly, eventually falling 7.5% to close at HK$2.757, with a transaction value of HK$362 million.
Judging from the market reaction, the market is not optimistic about Fantasy Company's move.
Mr. Michael, CEO of Dell Computers, said;
The pattern of the global IT field has been solidified. The last successful merger and acquisition can be traced back to the Royal Family Fund's acquisition of Dell Computer. Since then, challenges have come one after another. The latest attempt is the merger of Hewlett-Packard and Compaq. As you can see, it is actually just a joke.
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These words show that Dell Computer is so good at dealing with its competitors that it does not need the help of its big brother, Atlantic Business Machines Company, and is confident that it can solve the problem on its own.
Famous Wall Street analyst Robert Endler said;
Acquiring IBM's personal computer business can indeed enhance its own strength, but it is foreseeable that no matter which manufacturer succeeds in the acquisition, it will lose most of the business of IBM's computer department and will need to rebuild retail channels, which will be a difficult process.
Before the words fell,
General Electric, a major IBM computer customer, announced that it would no longer order computers from IBM and would instead order OPPO brand computers and enterprise servers from Atlantic Business Machines. This order is worth approximately US$75 million.
Not long after the new company was born, it suffered a heavy blow.
It can be seen that although Fantasy Group was able to acquire IBM computers, it did not have enough brand power to operate, as evidenced by the departure of relevant major customers.
In the current fierce competition in the existing market, famous manufacturers such as HP, Sony, NEC, Toshiba, and Dell are all trying their best to compete for retail channels. This is by no means the acquisition of a brand to inherit the customer base.
Throughout 2003, there was another well-known large company that was having a hard time, and that was Microsoft.
As if under a curse, the two mega-mergers worth more than 100 billion US dollars in the past two thousand years were not very successful. The US$184 billion merger between America Online and Time Warner was full of troubles and its performance was shocking.
Yahoo, which Microsoft spent US$182 billion to acquire, was even worse. Its performance could be described as vomiting three liters of blood.
In one and a half years, the big spender Yang Zhiyuan frantically acquired more than 160 high-tech Internet companies in Silicon Valley. Yahoo expanded rapidly like a puff of air and became the largest employer in Silicon Valley.
As a result, the high-tech startups acquired did not enrich Yahoo's product line, and small detonators detonated one after another, almost causing him to become paralyzed.
The share price of Yahoo.com has also shrunk sharply by more than half, and now only has a market value of more than 70 billion US dollars, which makes Bill Gates tremble with heartache.
Wang Yaocheng, who is far away in Europe, expresses his deep sympathy;
Although I had foreseen this scene a long time ago, I also reminded my friend Bill Gates that a person's ability is limited! It's a pity that a good company has still reached this stage.
Looking back on many years of experience in the industry shows;
Prudence is necessary, and risk control is even more necessary.
In the 13 years since its establishment, Silicon Valley Arctic Ocean Holdings has invested in no more than 150 Internet high-tech companies, with an average of more than a dozen companies every year. This is because it cannot control more companies well.
The experience of Yahoo tells us that we must not waste money, and if we do, we must be responsible.
These words reached the Microsoft headquarters in Diamond City, and Bill Gates was so anxious that he spurted out blood. He went back to rest without saying a word in depression, and did not come to work for three days.
I guess I found a corner to cry.
Microsoft's troubles don't stop there. This year, the European Union's Antitrust Law prohibits Microsoft from bundling sales of Windows systems, and plans to fine Microsoft 497 million euros and require it to change the way it bundles operating systems.
The Linux operating system developed by Red Hat Systems is occupying a large number of enterprise and personal server markets and is widely accepted by the world market, forming a strong challenge to Microsoft's systems and causing Microsoft's share of the personal computer operating system market to decrease sharply.
All of this has brought huge constraints to Microsoft's international market development. It can be described as dancing with a shackled giant, which feels quite uncomfortable.
overall
Microsoft's investment in the high-tech field of the Internet focuses on acquiring software technology companies, and there are only a handful of successful cases.
Recently, Microsoft's investment direction has undergone a significant change, turning to investment in new mobile markets such as communications, online search, e-commerce, ERP, anti-virus software, and online games.
Perhaps inspired by the Royal Family Fund, Microsoft suddenly became enlightened and increased its investment in industrial companies.
The most obvious investment case is Microsoft's investment of US$5 billion in the American Telephone and Telegraph Company, and it has successively made strategic investments in Apple Computer, Comcast, EL Communications, and Akamai Technology, and has achieved very good returns.
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If you don't know how to play, it is smart to learn how others play.
After suffering a lot, the first thing Microsoft did when it woke up was to fire Yang Zhiyuan, the big loser, and ask him to leave with a high severance package.
However, the mess of Yahoo left by Yang Zhiyuan still needs to be solved, which is another headache for Bill Gates;
Now that the perpetrators are gone, huge hidden dangers still exist in the more than 160 Internet high-tech companies that were purchased at high prices. What should we do?