Asymmetrical Information

Looks like HP's going to

Looks like HP's going to get to merge with Compaq after all. The technology market of the aughts is going to look more like Clash of the Titans than The New Economy.

What does Jane Galt think? Well, if you've been reading, you know that Jane Galt thinks most mergers don't work very well. This one isn't going to establish a monopoly -- there's still Dell out there. Cost savings are often hard to realize, and those that are usually get eaten by the merger costs. No cospecialized assets here. Overall, five gets you seven we see a decline in shareholder value over the next two years. A good indication that the market suspects the same thing is that the stock has followed the usual pattern of stocks after a merger is announced: the buyer (HP) is down, while the seller (Compaq) is up, indicating that the market expects the buyer to get the worst of the deal while the Compaq shareholders walk away with a nice windfall.