HP and Compaq - the inside story

Backfire - Peter Burrows
ISBN 0-471-26765-1
£20.95
Published By Wiley

The merger of Hewlett Packard (HP) and Compaq saw the largest proxy share battle in US corporate history and created the tenth largest company in the world.

This book, by US technology journalist Peter Burrows, covers those turbulent times and offers an often fascinating insight into some of the key players in the IT industry.

Depending on your viewpoint, the merger either created a company more suited to the new age of business and technology or ripped up the social contract that had been fostered by Bill Hewlett and Dave Packard.

The resulting company is still sorting itself out but internally bears little resemblance to the egalitarian business pioneered in the 1970s, when it employed 50,000 people and three private offices - one for Hewlett and one for Packard, and one for an engineer who ranted and raved so loudly his cubical walls extended to the ceiling.

The author wrote the initial phases of the book with co-operation from both sides, but once the merger was completed, HP ceased to play ball. Nevertheless Burrows has garnered a lot of detail on the key players in the game and the process of the merger.

On one side of the battle for control was Walter Hewlett, son of the founder and head of the family trust that administered a large chunk of HP shares.

On the other was Carly Fiorina, part of the new breed of high profile, profit driven chief executives that has flourished with the maturation of the IT industry.

By the end of the 1990s HP was struggling. Growth was sluggish, its products were under heavy volume competition and it seemed leaderless and lacking direction.

The board brought in Fiorina, then at Lucent, with the task of putting it back on track. The book details her life and early career, explaining the processes used during her time at Lucent and the thinking that installed her as chief executive.

Fiorina's management style, which would go unquestioned if she was a man, has been noted before and the book is even handed. But after reading of the origins and culture that typified HP, her choice as chief executive was either odd or inspired.

The demise of the job for life in Europe, Japanese Zaibatsu culture and the HP Way are all part of the changing face of the industry and few people could have forced through the changes needed against massive internal pressure.

Walter Hewlett on the other hand was seemingly not a man suited to business, yet he fought and nearly won a share proxy fight for control of the company after refusing to support the merger and growing uneasy about what Fiorina was doing to the company.

Although the author is over generous in his praise for Hewlett, his performance against Fiorina was nevertheless impressive considering his background.

As a business practice handbook there is little here that you will not find in any MBA textbook, but it is a good guide to the introduction of radical change and getting to the top.

Fiorina is a team leader par excellence and HP's staff could be the toughest of audiences. The account of her winning the HP role should be a textbook example of good networking.

It is still too early to say what will happen to HP, and the author acknowledges this. Many staff are coming to the end of generous golden handcuff packages and the market for technology seems stuck in single digit growth.

Meanwhile the market still has not made a decision as to the attractiveness of the new HP, but if you want a good grounding in the background to the company and its key players this would make an interesting read.