Mornin' Cap,
Not much to say about a fellow who has a total disregard for the after effects of this sort of battle. I came very close to selling last week because of not wanting to continue to be a masochist but decided to hold and see what happens.
--
HP, Compaq Fanning Merger Flame
They insist IT benefits include R&D, services
By JAIKUMAR VIJAYAN
(March 18, 2002)
Executives at Hewlett-Packard Co. and Compaq Computer Corp. continued to pitch the technology benefits of their proposed $22 billion merger ahead of this week's scheduled shareholder votes.
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Meanwhile, a senior executive in Compaq's services organization said the merger won't result in changes to the customer representatives, support teams and account managers that users are accustomed to dealing with.
The reassurances came just days before shareholders of the two companies are slated to vote on the merger. The voting will take place March 19 and 20. Also last week, a flurry of voting decisions were made by large institutional shareholders of both companies.
In a press conference last week, HP Senior Vice President of Research Dick Lampman said a combined HP/ Compaq would invest an estimated $4 billion annually in research and development in several technology areas.
A major portion of the research activity would be focused on enhancing existing products by taking advantage of each company's skills in areas such as high-availability clustering and nonstop computing, Lampman said.
In the long term, such product-oriented research should yield substantial benefits in areas ranging from printers, scanners and digital imaging products to core enterprise servers, services and storage products, he said.
In addition, the two companies plan to set up a central research group headed by Lampman, whose mission would be to focus on advanced technologies. The merger would add Compaq's four research labs to HP's seven.
Such comments are aimed at showing users that the merger would yield strong technology benefits, said Jonathan Eunice, an analyst at Illuminata Inc. in Nashua, N.H. The two companies are trying to show "that they are not going to collapse into a commodity organization," he said. "They want to show that their combined assets provide some interesting opportunities and that they are going to be an innovative company."
Ready to Integrate
The companies are also appealing to the business concerns of users. According to Peter Mercury, vice president of Compaq's services organization, much of the integration work on the services and support front has already been planned and is ready to be put into motion once the merger is approved. Nearly 200 people from both companies and an external consulting firm have slogged through the issues involved in combining their services organizations, he said.
"We want to make sure that there is going to be no impact on customer-facing employees and their first lines of supervision," Mercury said.
But not all users are convinced that the transition would be smooth.
"There's going to be a dilution in the quality of service that I've come to expect from HP," said John R. Wolff, CIO at Los Angeles Athletic Club Ltd., which uses a wide range of HP equipment.
"My basic concern is the introduction of Compaq management into HP. Viewing their track record and the way Compaq has handled itself the past few years, I don't see any improvement by mixing their management with HP's," Wolff said.
The merged services organization, which would have more than 60,000 employees, would focus on outsourcing and systems integration opportunities, Mercury said.
Even though it would still be relatively small compared with IBM and Plano, Texas-based Electronic Data Systems Corp., a merged HP/Compaq would be able to compete for the largest outsourcing deals, said Eric Rocco, an analyst at Stamford, Conn.-based Gartner Inc.
"Neither company has been given enough credit when it comes to what they are already doing with outsourcing and systems integration," Rocco said.
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