In May 2002, Hewlett-Packard acquired Compaq Computer in a takeover that featured considerable drama. In deliberating the acquisition, H-P director Walter Hewlett, son of founder William Hewlett, suggested that the decision was not the right choice. He was concerned that the gap between the corporate cultures of the two firms was too wide to bridge, and he was troubled by the heightened focus on the PC business, a highly competitive business where H-P was not low cost leader. Hewlett opined that doubling down on PCs with Compaq would divert resources from H-P’s enterprise business, thereby hurting the firm’s ability to compete with IBM and Dell. He argued instead that H-P should essentially become a printer firm, focusing on its strongest business. Nevertheless, Walter Hewlett reluctantly voted for the acquisition of Compaq as a member of the Hewlett-Packard board. However, as chairman of the William and Flora Hewlett Foundation, he actively opposed the merger during a subsequent proxy battle. When Walter Hewlett’s term on the board of Hewlett-Packard expired in 2002, he was not invited to rejoin. Discuss these events in light of the chapter text.
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