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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: hlpinout who wrote (90980)	4/29/2001 10:03:29 PM
From: hlpinout	Read Replies (1) \| Respond to of 97611

Compaq snaps up e-biz consultant Proxicom By Matt Hicks, eWEEK April 27, 2001 10:30 AM ET Compaq Computer Corp. has agreed to acquire e-business consulting company Proxicom Inc. for $266 million in cash, the companies announced Thursday. The move will bolster the computer maker's global services division by adding 950 consultants and employees to the group, primarily in North America. Compaq Global Services has 38,000 employees worldwide, with about 5,000 in North America. For Proxicom, the sale comes as it has stumbled amid the drop-off in demand for e-business consulting. In March, Proxicom announced layoffs of 19 percent of its workforce. Chairman and CEO Raul Fernandez blamed slowing demand for the company's weakened first-quarter earnings. The acquisition won't mean the end of Proxicom, which was founded in 1991. Instead, the company will become a wholly owned subsidiary of Houston-based Compaq and retain its brand and its Reston, Va., headquarters. Fernandez will maintain leadership of the group and report up through Compaq Global Services' Vice President and General Manager Jeff Lynn. Common customers Compaq was attracted to Proxicom because it will complement, rather than duplicate, the work of the Global Services division, Lynn said during a conference call with media and analysts. That should avoid a complicated integration. Both companies focus on major enterprise customers and currently have common customers such as General Motors Corp., General Electric Co., AOL Time Warner Inc. and Merrill Lynch & Co. Inc. "Proxicom has a very strong brand and that's why we're retaining the brand identity even after acquisition," Lynn said. "It's a healthy company and it has a good pipeline of business." Compaq has spent the past couple of months taking a detailed look at prospects among e-business consultants, many of which are battling a fall-off in business. Fernandez declined to provide details on whether Proxicom was searching for a buyer or how the deal came together. Both companies cited a fit with Proxicom's focus in the vertical markets of automotive and manufacturing, communications and high technology, consumer goods and retail, energy, financial services, media and entertainment, and services industries. For Compaq Global Services, financial services and telecommunications sectors represent 30 percent of its revenue. Compaq expects the transaction, approved by both companies' boards of directors, to start bolstering earnings in 2002.