Essay by PaperNerd ContributorUniversity, Master's August 2001

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Hewlett-Packard Company Over the past three months Hewlett-Packard shares of stock started out with a price of $18.21 on September 5th and rose to $21.49 as of December 5th. With the stock fluctuating rapidly in price over merger talks with Compaq, the computer giant decided after months of negotiation to not follow through on the merger with Compaq since their stock and company earnings have decreased severely in the past year. Despite their reluctance to merge with Compaq, Hewlett-Packard stock rose in early December as they decided to hold their own in the market by continuing their own line of computers and software.

        Just before September 11, 2001 HP announced that the earnings report for the third quarter would be lower than expected. This announcement plus the added strike to the economy from terrorism sent not only HP stock, but the whole market plummeting. The lowest the stock fell was to $13.25

on September 20th. After the initial shock however consumers remained confident and continued to purchase technology products and by mid October the selling levels were restored to before September 11th.

On October 29, 2001 HP decided to provide Colleges with notebook computers through a new program called Campus Advantage. Despite the Drop in stock to $17.40 by this date, HP felt it to be crucial for them to integrate their operating systems into the educational system. This action did not directly effect the stock price, but it reminded consumers of the company's growing computer market and interest to be the forerunner.

        In addition to network and software packages, HP released the first ever retail computer with a rewritable DVD drive. Released on November 11th at an affordable price of $1999.00. After the release the stock made a 1 point gain or a 5% increase in its value the next day as HP fulfilled a much anticipated new option for video editing and recording. Two days later HP announced they would beat the anticipated 4th quarter target despite a net income drop of 89% over the past year. Despite the lackluster performance investors felt confident as they realized Hp could have been hit harder like Compaq and possibly forced out of the PC market.

        Hewlett-Packard decided not to merge with Compaq on December 10, 2001 due to Compaq's extreme decline in the marketplace the past year. This announcement made HP stock raise in value 7% to $23.10 at the closing bell on December 10th. Hewlett-Packard stock proved reliable in the computer and printer market as they not only improved their selection of computer, but also stayed clear of a merger that could have left investors worried.