H-P may delay Compaq merger start
By Mike Tarsala, CBS.MarketWatch.com
Last Update: 11:45 AM ET March 27, 2002
PALO ALTO, Calif. (CBS.MW) -- Hewlett-Packard may push back the planned launch of the merged H-P/Compaq beyond the first week of April, in part because the company needs more time to switch operations to rank-and-file employees, executives said in a filing.
The companies face several obstacles before they can begin joint operations. The first is the H-P shareholder vote tally, which still must be certified, said H-P's Webb McKinney and Compaq's Jeff Clarke, who head the merger's integration, in a letter to employees.
They reiterated that management believes it has enough votes to win merger approval, and that the process is likely to take several more weeks. Dissident board member Walter Hewlett, who led a proxy contest against the merger, still holds that the shareholder vote tally is too close to call.
Even if the company gets shareholders' OK, as expected, H-P and Compaq might not begin operations immediately after they file all their legal merger documents, according to the letter.
"We will not necessarily launch the new company on the legal closing date," McKinney and Clarke wrote in the filing. "The new management team needs a few days to transition their operating plans from the 'clean teams' to their respective staff and line managers."
The filing didn't offer an expected start date for the joint company. H-P executives had planned to complete the merger in the first week of April. The merger will still happen in the first half of 2002, said an H-P spokesman, which is the target spelled out in legal filings.
More than 1,200 H-P and Compaq managers are part of "clean teams" that organize integration planning. The number of clean-team employees is expected to increase as the merged company moves closer to its official launch, the filing said.
McKinney and Clarke cautioned employees that not all organizational decisions will be made by the official launch day. The top priority is to minimize customer disruption.
Details surrounding an expected 15,000 job cuts will be a second priority.
"Our intent is to announce decisions around job selection and reduction as soon as we can," McKinney and Clarke said in the filing.
Until the combination is completed, H-P and Compaq are legally required to function as competitors, the filing said. H-P and Compaq have instructed employees who are not on clean teams not to mingle with employees in other parts of the company.
H-P also has established a "launch team" focused on communicating important merger events, the filing said. Expected communications include presentations to analysts, detailed internal information about market strategies and organization, and "playbooks" with lists of products, services and contacts for customers.
Shares of H-P (HWP: news, chart, profile) lost 31 cents to $17.77 in midsession trading Wednesday. Shares of Compaq (CPQ: news, chart, profile) lost 22 cents to $10.63.
Mike Tarsala is a San Francisco-based reporter for CBS.MarketWatch.com. |
