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Last Labor Day, Hewlett-Packard announced that it was buying rival Compaq Computer in a deal that Compaq CEO Michael Capellas said would "change the basis of competition in the industry." A year later, the jury is still out on whether he was right.
The combined company still faces many of the same criticisms that were leveled when the deal was announced: Technology mergers rarely work. The deal will be a distraction. Buying Compaq will not help HP strategically in handling IBM's breadth or Dell's more powerful direct-sales model.
While it's too soon to tell if those concerns were accurate, the early results have been mixed.
Since the deal was completed four months ago, HP's revenue has fallen more than the company anticipated. Perhaps more troubling, the merged company continues to lose market share in both PCs and high-end servers.
HP is No. 1 in both markets, according to various studies, but losing ground to competitors. Dell will probably return as the PC king this quarter, according to a Gartner Dataquest report. As for servers, Gartner Dataquest analyst Jeffrey Hewitt isn't optimistic.
"I don't see a pretty picture for the new HP," Hewitt said. "The new HP is steadily declining while their opponents are now on growth paths."
Still, analysts give the company credit for moving quickly to devise product plans for the combined company and avoiding the confusion that eventually derailed Compaq's acquisition of Digital Equipment.
"Rumors of a train wreck have been greatly exaggerated," said Terry Shannon, an editor who's witnessed several mergers, as demonstrated by the ever-changing name of his newsletter: "Shannon Knows DEC," "Shannon Knows Compaq," and now, "Shannon Knows HPC."
Will HP be able to reverse the declines? If so, when?
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