1 Universidad del Valle. Lectura de textos Generales y Académicos II ENGLISH II Midterm.

Accounting

2 NAME ________________________________________ CODE: _____________________________

3
4
What Happened to Compaq.com?
When you think about personal computer conglomerates the first names that spring to mind may be the likes of Lenovo, HP and
5 Dell, but have you ever heard of Compaq? Well, if you were born after the year 2000, maybe not. Additionally, what you may not
6 know is Compaq was part of the greatest David vs Goliath story in computing history, and won.

7 When Rod Canion, Jim Harris and Bill Murto founded Compaq in 1982 with just $3000 they set out with a clear
8 vision of providing personal computers that were not only portable, but had the power to compete with IBM’s
9 machines. The Compaq Portable they created was revolutionary and very affordable, beating out Canadian rivals
10 Hyperion in terms of sales and overall growth. The reason the Compaq Portable was so revolutionary was because
11 they chose to make it 100% compatible with IBM’s systems, it was portable, as well as being as powerful as the top
12 IBM machine out there. This was a direction that other competitors chose not to undertake as they solely focused on
13 price to drive sales, missing the mark on the hardware side, paving the way for Compaq to gain significant market
14 share with their robust systems and compatibility.
15 Under Rod Canion’s strong directional thinking, Compaq quickly rose to become an industrial giant in the PC field,
16 making history along the way: including becoming the youngest ever Fortune 500 company, only 4 years after its
17 establishment. In 1987 they reached the $1 billion revenue mark, and by 1991, they were 5th place in terms of
18 market share with around $3 billion in sales. Again, it was through Rod Canion and his leadership that made this
19 happen. He created a company culture that attracted the industry’s top talent along with a somewhat flat hierarchical
20 structure which was a strong motivational factor.
21 However, the early 1990s saw Canion ousted from the company he fought so hard to grow due to stark differences in
22 business thinking with the other senior leadership. This dismissal moved Compaq into a new direction; looking at
23 acquiring various companies to open up potential new revenue streams and markets. New CEO Eckhard Pfeiffer
24 undertook a strategy of focusing on the retail market with offerings such as the Compaq Presario, a sub $1000 PC
25 which was one of the most affordable options at that time. This, among other bold decisions from Pfeiffer propelled
26 Compaq to new heights. At this point, Compaq, the once tiny personal computer manufacturer, overtook both Apple
27 and IBM as the top PC manufacturer.
28 Despite the change in direction and early successes of Pfeiffer, all good things come to an end. Compaq slowly
29 started to lose ground on their fierce rivals due to lack of clear vision amongst a variety of poor decisions.
30 These poor decisions mainly came in the form of acquisitions. The company acquired Tandem Computers, a
31 mainframe computer maker, for $3 billion in 1997. It then acquired Digital Equipment Corporation (DEC) in 1998
32 for $9.6 billion. It was seemingly a good idea; however, the companies were not a good match. For example, DEC
33 was in the business of manufacturing computer chips, but Compaq did not have plans to continue in that line of
34 business. DEC’s chips weren’t compatible with Compaq computers and DEC made minicomputers, a type of smaller
35 computer with less power than Compaq’s products. The company also made UNIX systems while Compaq was
36 focused on Intel-based systems that ran Windows NT. Once the previously mentioned acquisitions became a
37 formality, some people argue that this was the start of Compaq’s downfall. Company cultures clashed significantly
38 and large quantities of layoffs created a hostile and demotivating working environment. This led to deadlines being
39 missed and being unable to shift large quantities of inventory. Thus, a motion was created to remove Pfeiffer as CEO
40 and install someone that was able to repair relationships with companies such as Microsoft to enable a bounce back.
41 Unfortunately, this was a little too late as Compaq continued to struggle against low-cost competition such as Dell
42 and when the dot com bubble burst, their share price had plummeted to almost half. It was this dip in performance
43 that sparked the conversations to merge with Hewlett-Packard (HP) to try and become the top dog once again.
44 While some regard the latter portion of Pfeiffer’s reign to be the start of the downfall for Compaq, others argue it
45 was the merger with HP that provided the nail in the coffin for the already struggling company.
46 The merger was criticized publicly by Wall Street analysts as well as senior decision makers within HP and only
47 marginally passed when the internal votes occurred. CNET News reported that HP had written a letter to its
48 employees and the Securities and Exchange Commission in defense of the acquisition: “And, for the first time in a
49 very long time, IBM will have a competitor that’s strong enough, bold enough, and talented enough to take them
50 head-on in the enterprise space.” The company’s CEO at that time, Carly Fiorina, had complete faith that this merger
51 would be a success and challenged those who doubted the acquisition to watch the space.
52 The friction that was caused in top level management during the merger along with around 15,000 in layoffs,
53 contributed to the further downfall of Compaq. HP-Compaq started to lose more market share to Dell amongst
54 various other competitors which, in turn, was the beginning of the end for Compaq.
55 Due to declining growth and being leapfrogged by Dell in terms of sales, HP looked to focus on bringing Compaq
56 products into the ‘HP line’ and moved any Compaq options into a limited ‘budget’ segment. This continued
57 throughout the early-mid 2000s and HP started to remove almost all original Compaq branding from its laptops. A
58 new logo, HP software as a standard, and pushing their better performing HP Elitebooks and Probooks was the
59 death for the Compaq brand. From 2013, Compaq almost ceased to exist.
60 While the acquisition had a more than shaky start, some analysts now argue that the HP-Compaq partnership
61 ultimately helped HP as a whole. For instance, after the acquisition “HP started taking Dell’s approach and began
62 selling more direct” said Tommy Wald, CEO of White Glove Technologies, a Texas-based technology and IT
63 managed services consulting firm.
64 Even though the HP/Compaq merger sent jitters through the spines of many, it did not turn out to be the complete
65 disaster many predicted. Although Compaq.com is no longer available in most parts of the world, the company’s
66 initial success was unprecedented. Its smart strategy and strong products set the tone for today’s PC makers and
67 allowed HP to learn and grow in a market that was becoming increasingly competitive.
68 Compaq products were rebranded, taking on HP’s nameplate and HP’s new acquisition became the company’s face
69 for its lower-end computers. However, for reasons not stated, HP discontinued the Compaq brand in 2013.
70 In 2015, the Newsan group announced that it had acquired the license to produce Compaq notebooks in Argentina.
71 However, this did not result in the return of the Compaq.com site. It looks like the website was killed just like many
72 other Compaq products had been previously.

73 Universidad del Valle. Lectura de textos Generales y Académicos II ENGLISH II

74 NAME: ________________________________________ CODE: ___________________________________

75 A. Listening comprehension
76 Listen to a conversation between two accountants. Choose the correct answers. (5 points) https://youtu.be/1aay9Otr-
77 RI
78
79 1 What is the dialogue mostly about?
80 A how to generate revenue B the importance of proper cash levels
81 C how to keep from being bought out D how to avoid a zero cash balance
82
83 2. The woman thinks they should _______
84 A buy out a competitor B invest to generate revenue
85 C operate with a zero cash balance D prepare for unexpected expenses
86
87 Listen again and complete the conversation
88 Accountant 2: I'm glad we have so much cash in reserve.
89 Accountant 1: Really? Don't you think it's excessive?
90 Accountant 2: Well, no. I think we need that 1 _____________________________ in case something unexpected happens.
91 Accountant 1: What are you thinking of?
92 Accountant 2: Well, I heard that one of our competitors' sales are plummeting. Maybe we can 2 _____________________ _
93 Accountant 1: I 3 _________________ . But in my opinion, it's not good to have that much cash 4 ____________ .
94 Accountant 2: You think it's unproductive?
95 Accountant 1: Exactly. Why not invest it in 5 ___________________________ generate revenue?
96 Accountant 2: Hmm ... The way I see it, it's better to 6 ____________ and prepared for unexpected expenses.
97 Accountant 1: Well, 7 __________________________________ have a zero cash balance.
 98
99 VOCABULARY
100 Complete the following chart (5 points)
Word Part of speech Meaning in Spanish

1. Thinking (line 9)

2. Reveneu (line 11)

3. Match (line 26)

4. Seemingly (line 26)

5. Layoffs (line 32)

6. Plummeted (line 36)

7. Share (line 47)

8. Performing (line 52)

9. Partnership (line 54)

10. Consulting (line 57)

101 B. COMPREHENSION QUESTIONS. (15 points)

102 Answer the following questions, based upon the text

103 1. What is the reading about?

104 __________________________________________________________________________________________________

105 __________________________________________________________________________________________________

106 2. What were the main clues for Compaq success in its beginnings? (2 points)

107 ____________________________________________________________________________________________________

108 3. Why did Canion get dismissed from the company?

109 ______________________________________________________________________________________________________

110 4. What does the expression on line 39 “the nail in the coffin for the already struggling company” mean? Explain in your own
111 words in English.

112 ______________________________________________________________________________________________________

113 5. Why did Pfeifer managerially fail?

114 ______________________________________________________________________________________________________

115 ______________________________________________________________________________________________________
116 6. Why was the Hewlett-Packard (HP) merger criticized?

117 ______________________________________________________________________________________________________

118 8. What were the main effects arisen from the merger? ( 2 points)

119 a. ____________________________________________________________________________________________________

120 b. ____________________________________________________________________________________________________

121 c. ____________________________________________________________________________________________________

122 d. ____________________________________________________________________________________________________

123 9. Complete the chart about the managerial differences in CEO’s approaches. (2 points)

Rod Canion Eckhard Pfeiffer Carly Fiorina,

124

125

126 10. Why did the consultant say that merger was not that bad? Nominalize ( 2 points)

127 ______________________________________________________________________________________________________

128 11. How did HP manage to catch up with Dell? Nominalize (2 points)

129 a. ___________________________________________________________________________________________________

130 b. ___________________________________________________________________________________________________

131 LANGUAGE STUDY (PASSIVE VOICES)

132 Find out Passive voices in the reading. (5 points)

Passive voice (line ) Spanish translation

133 Nominalize the timelines presented on the text. (9 points)

Year or date Fact or event

1982

1987

Early 1990s

1991

1997

1998

Early mids 2000

2013

2015

134

135 REFERENCES & COHESION ELEMENTS

136 What do they refer to? Nominalize (6 points)

137 a. They (line 11) : ____________________________________________________________________________

138 b. This (line 6) : _______________________________________________________________________________
139 c. This (line 12): _______________________________________________________________________________
140 d. This (line 19) : ______________________________________________________________________________
141 e. This (line 32) :_______________________________________________________________________________
142 f. It (line 36): _________________________________________________________________________________
143 CONNECTORS. Connect the following ideas. NOMINALIZE (5 points)
144 Connector: As well as (line 5) Type: _________________

145 Idea 1: _______________________________________________________________________________________________

146 Idea 2: _______________________________________________________________________________________________

147 Connector: Although (line 29). Type: _______________

148 Cause: _____________________________________________________________________________________________

149 Effect: _____________________________________________________________________________________________

150 Connector: Despite (line 22) type: _________________

151 Idea 1: _______________________________________________________________________________________________

152 Idea 2: ______________________________________________________________________________________________

153 Connector: Due to (line 23) type: _____________________

154 Idea 1: _______________________________________________________________________________________________

155 Idea 2: ________________________________________________________________________________________________

156 Connector: Thus (line 33) type:______________________

157 Cuase: ____________________________________________________________________________________________

158 Effect: _______________________________________________________________________________________________

159

160