Well, after listening to their explanation of the $25 billion deal to analysts and reporters, I still don't like the deal all that much for Hewlett-Packard (HWP:NYSE - news - commentary) shareholders and employees ... and I still think Compaq (CPQ:NYSE - news - commentary) got the better of H-P here.

To be sure, the deal gives H-P Chairman and CEO Carly Fiorina much of what she has wanted: a bold entry into the consulting business (after the failure, this time last year, of H-P's bid for the consulting part of PricewaterhouseCoopers); apparent dominance in retail PC sales; critical mass in PC manufacturing economics; and a clear and unmistakable statement that H-P's in the computer business, not the test-instruments business or any other relic of its past.

A fair question is whether those are worthwhile goals.

I think the new H-P-Compaq combine will find it very hard to establish itself as a major force in corporate IT consulting. I've watched from inside as a lot of big companies have picked mega-consultants for their enterprise-level work, and I don't think what H-P-Compaq brings to the table is going to prove very interesting to the people making these decisions. Worse, by committing itself to this path, H-P-Compaq irritates the hell out of the other consulting firms in the business who will be even less likely to build systems around the hardware and software products of the two.
Dominating retail sales in PCs is not a very smart goal, with a small and probably declining potential payoff. As I've written before, a smart move for H-P would have been to simply withdraw from its retail PC business. Now it's in even deeper than ever. Again: a profitless business on almost any scale. And unlikely to get better.
I don't think either H-P or Compaq will score important cost savings as PC producers from the scale issues following the merger. Both are already at sufficient scale, and use outsourced manufacturing enough, to get good parts prices. Besides, their build costs aren't their main problems; it's distribution costs and marketing costs that are killing them.
And finally, while I agree this makes the direction of H-P even clearer, I think it's the wrong direction. The PC business is over. Servers are important, but if H-P proposes paying $25 billion to beef up its server business, it's nuts. And as I said, corporate IT consulting doesn't look to me like a winner.

So: Clear direction, yes, but why this direction?

Distraction is a big, big issue. At a time when both the H-P and Compaq forces need to focus intensely on controlling their businesses and making them grow, managing a merger -- and a merged company -- is going to be a bear. No matter how much we hear about putting up strong walls around the integration work, in fact merger-related issues are going to suffuse every decision on every level throughout the "new" H-P for two or three years, and maybe more.

This is a lousy time to burden H-P or Compaq with the pains of a huge merger. Heck, Compaq is still trying to digest Digital Equipment.

More: These two giants are just too similar already. Synergies arise when companies with a significant delta merge. Here, it's a cut-and-paste job, trying to figure what to do about all the overlapping, nearly identical lines.

In my earlier column I indicated that both H-P and Compaq were being awfully blithe about the competitive and regulatory issues here, and that absent some key divestitures, this would be a hard deal to get approved by the Justice Department.

During Tuesday morning's press conference, Carly Fiorina said she and Mike Capellas have discussed probable divestitures exhaustively, and believe they know where and when they should come. She did not say these divestitures had been considered in the light of gaining Justice Department approval for the merger. They could, of course, be moves based on business needs -- but I found it encouraging that a good deal of strategic thinking has already gone into which parts of the combined business are severable.

Remember that approval in Europe, a key market, or set of markets, for the deal is vital. There was banter from Fiorina about European Union competition-cowboy Mario Monti in the press conferences Tuesday morning, but nothing substantial.

Finally, we have heard so much soap opera over Carly Fiorina and her future job prospects over the last six months that she will be under an unbelievably intense microscope now, as the market watches to see if she can make this work.

My guess: In a year or so, Carly will be gone, and Capellas will be running H-P. Sorry, Carly.

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