Compaq's Brand Name Will Survive Merger with Hewlett-Packard, CEO Says
May 04, 2002 (The Dallas Morning News - Knight Ridder/Tribune Business News via COMTEX) -- Compaq Computer Corp.'s brand name will live on after the Houston firm becomes part of Hewlett-Packard Co. on Tuesday, according to a memo from Compaq chief executive Michael Capellas.
Mr. Capellas told employees in an e-mail Thursday that H-P finds the Compaq brand valuable.
"I think you'll see how well we have combined the fundamental strengths of both companies -- and how we're going to use the equity in the Compaq brand," Mr. Capellas wrote. "You'll also see other ways in which our proud heritage will be represented in the new H-P."
H-P closed the $18.69 billion acquisition Friday and promised to end speculation Tuesday on the fate of Compaq's name and both companies' products.
Though Tuesday marks the official beginning of the combined company, its ticker symbol, HPQ, will start trading Monday on the New York Stock Exchange. H-P opted to change its symbol from HWP to reflect the addition of Compaq, which traded as CPQ.
To start NYSE trading Monday, H-P CEO Carly Fiorina will appear on a video screen above the trading floor to ring the bell from H-P's Palo Alto, Calif., headquarters, an NYSE spokeswoman said.
In their final full day of trading as separate entities, Compaq shares gained 24 cents to close at $11, while H-P stock rose 35 cents to $17.44.
That means H-P paid a 3-cent premium per share to buy Compaq. After the market close, H-P issued 0.6325 share, or $11.03, for each share of Compaq.
The two companies endured an eight-month battle with H-P shareholder Walter Hewlett to cement their merger. Mr. Hewlett was narrowly defeated in his bid to block the merger in a March 19 shareholder vote, then lost a Delaware court battle against H-P over the information it disclosed to shareholders about the deal.
H-P spokeswoman Rebeca Robboy said Friday that the company still plans to call itself Hewlett-Packard Co. after the merger. Analysts have suggested that the Compaq brand might survive on some products, including the iPaq handheld device.
The companies have not yet disclosed whether they'll keep making the iPaq and other products. They're bound by federal regulations to keep those plans quiet until the deal is closed.
H-P plans to tell employees of its product plans by Tuesday morning, then publicly announce the decisions in a midday news conference at its headquarters in Palo Alto.
Compaq and H-P employees may also find clues in the announcement about the fate of their jobs.
Before shareholders of both companies voted to approve the merger in March, Mr. Capellas and Ms. Fiorina said they would have to lay off about 15,000 workers worldwide to eliminate redundancies. Ms. Fiorina said this week that the layoff number may turn out to be lower.
Employees whose products are discontinued would face a greater chance of layoffs. Workers who are losing their jobs will be able to interview for other jobs within the company, Ms. Robboy said.
The Compaq brand's fate could affect the name of Astros Field, the Houston baseball stadium that has been bidding out its naming rights since losing Enron as a sponsor.
Compaq and Conoco Inc. are reportedly leading candidates for the bid. Arenas in Houston and San Jose, Calif., also bear Compaq's name.
Mr. Capellas has said the combined company will remain committed to Houston civic pride, but hasn't disclosed what might happen to the sports venues' names.
By Crayton Harrison To see more of The Dallas Morning News, or to subscribe to the newspaper, go to dallasnews.com.
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