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

To: PCSS who wrote (96552)	3/26/2002 11:25:32 PM
From: Elwood P. Dowd	Read Replies (1) \| Respond to of 97611

Downsize This: The Hewlett-Packard merger with Compaq won't produce any winners. By Bob Batchelor Web Exclusive: 3.25.02 Print Friendly \| Email Article "We recognize that integrating two cultures -- each with its own distinct heritage -- is a challenge. But the success of the combined company depends on building a strong common culture." -- Hewlett-Packard management statement, September 2001 A day after Hewlett-Packard and Compaq pumped an estimated $180 million into advertising to air their dirty laundry worldwide, H-P CEO Carly Fiorina claimed victory over anti-merger foe Walter Hewlett, the renegade board member, family heir and defender (in his eyes) of "The H-P Way." For his part, Hewlett was not ready to concede that H-P shareholders wanted to merge with Compaq, remaining cautiously optimistic as both sides wait for their votes to be counted. This could take weeks, and probably will lead to more than one comparison with the Florida debacle between Bush and Gore. Although it's too early to declare a winner in this messy public-relations nightmare, it is easy to see who will ultimately lose: the thousands of workers who'll be downsized after a) the merger is defeated, causing the two companies to retrench and cut short-term costs, or b) Fiorina wins and the "synergies" created by combining two companies that make essentially the same products render many jobs "redundant" -- corporate for layoffs. More than 2,000 people showed up at the Flint Center, an arena in Cupertino, Calif., for the vote, making the event seem more like a rock concert or political convention than a shareholders' meeting. Amid plainclothes cops and metal detectors, those protesting the merger, from disgruntled retirees to union reps, carried anti-Fiorina placards and fretted about the loss of jobs and possible bankruptcy. In stark evidence of where the crowd stood, Hewlett was cheered when he rose to speak inside the hall, while Fiorina received a hardy round of boos and catcalls. Naturally, after so much publicity and such divisiveness, it's hard to imagine a scenario in which the merged companies can rebuild and move toward a common culture. And culture is critical: Only a stronger combined company will have the chops to compete with industry leader Dell, whose success over the last two decades fueled the need for the merger. Top officials at H-P and Compaq have already announced that they've found about $2.5 billion in overlap from the combination of the companies, in areas from marketing and sales to legal and human resources. A figure that high translates into many, many jobs for employees at the lower levels of the corporate ladder. Another route H-P and Compaq will take includes closing down businesses and product lines that aren't competitive or competitive enough, similar to the moves Jack Welch took at General Electric in the mid-1980s. In his "Neutron Jack" days, tens of thousands of workers were shown the door and divisions that did not rank first or second in their fields were shut down. Perhaps the most damning evidence of employees' fear about losing their jobs in a combined company was released last week. That's when it was revealed that 66 percent of the employee plan voters were against the merger. Anyone who has ever spent time in a large company can attest that this is a telling statistic. It is the people at the ground floor who will make or break the merger, and they're uniquely attuned to the rumors, gossip and internal planning process. They have also read the stories about the spanking new two-year contracts Fiorina and Compaq CEO Michael Capellas will receive after the merger, totaling $117.4 million in salary, bonuses and stock options. Michel Lalliard, a Compaq marketing employee in France who flew into California to protest, told online news service CNET that he expects more than 50,000 jobs will be cut. Company officials at H-P and Compaq have already acknowledged that 15,000 positions could be eliminated. In Houston, Compaq workers are reportedly awaiting their pink slips and severance packages. History proves that downsizing is most often the quick fix for corporate America when business leaders yearn for a short-term solution to sagging revenues and stock prices. Neither company is shy about letting go of employees. H-P announced nearly 11,000 layoffs last year, while Compaq got rid of 8,500 employees. And these figures are in addition to the 15,000 merger-related positions that will be axed. The testy battle over the merger guarantees that there will be no true victors. Winning by a small margin does little for Fiorina or the new management team that must try to overcome months of headlines, press releases, and wicked Web sites to convince customers and remaining employees that they've done the right thing. If the proxy is defeated, Fiorina is little more than a lame duck, a blow that will send H-P spiraling. Either way, it is the frontline employees at both companies that have the most to lose. Significant staff reductions are a guarantee regardless of the outcome. This particular fight reveals the weaknesses in an economic system in which workers are expendable. Bob Batchelor Copyright © 2002 by The American Prospect, Inc. Preferred

To: PCSS who wrote (96552)	3/27/2002 12:06:51 AM
From: Elwood P. Dowd	Respond to of 97611

Compaq says won many health care deals despite merger By Peter Henderson SAN FRANCISCO, March 27 (Reuters) - The expected chief of high-end computing at the merged Hewlett-Packard Co. (NYSE:HWP - news) and Compaq Computer Corp. (NYSE:CPQ - news) said on Wednesday that recent health care industry deals for $300 million showed customers wanted the one-stop technology shopping promised by the merged HP. Compaq was keeping customers and had signed the deals with health care companies since announcing in September plans for the merger, Peter Blackmore, executive vice president of sales and services at Houston, Texas-based Compaq, said in a telephone interview. ``We haven't lost our momentum,'' he said, adding that the deals also proved customers had not abandoned Compaq, despite the impending merger, which spurred a nasty and vocal battle over the companies' future. Blackmore will take over the high-end computer servers group at HP if the $19 billion merger goes through. HP has said shareholders approved the deal by a slim margin last week, but official certification is expected to take weeks. The merged company is betting that big customers will choose to buy all their gear from one shop, although analysts have questioned whether corporations with different types of machines running different programs would not use a variety of suppliers. Compaq said that since the merger was announced it had done about 14 deals for servers and services to health care companies worth some $300 million over three to five years. Compaq has already announced a number of those deals, which build on the roughly $1.2 billion in North American health care sales that Compaq had previously. ``We see it as very natural that you will have high end Unix, Linux, with a range of operating systems living alongside each other. Almost all customers I go to have a mix of that,'' he said. ``The norm is a mix, and I don't see that changing.'' One new example is a $10 million, 2-year deal with San Diego-based Sharp HealthCare which includes Himalaya mainframe-style servers, Alpha servers running the high-end Unix operating system, Microsoft Windows-based low-end ProLiant servers, Compaq's storage area network and wireless communications. Other health care customers included the Medical College of Wisconsin, Virginia Commonwealth University's Medical College of Virginia Hospital, Baptist Memorial Health Care Corp and Cardinal health. ``Increasingly they (customers) want the end-to-end capability, not just Unix, and that enables us in front of the customer to differentiate ourselves enormously from Sun Microsystems(NasdaqNM:SUNW - news), and when we merge, the differentiation gets even broader,'' Blackmore said.