Penman unveils merger plans; huge staff cuts in store

Penman unveils merger plans; huge staff cuts in store

-- Between three and four hundred people in Australia will lose their jobs as a result of Compaq's acquisition of Digital, according to Ian Penman, the combined company's newly appointed managing director.

The redundancies will be finalised by the end of September, but no plans have been made. Penman said the redundancies were necessary to create a "cost-effective business model".

He also said an announcement would be made "in the next 24 hours" about the company's two Australian manufacturing plants.

Compaq's integration process will rollout over the next three months while the Digital brand will be phased out in the next six to 12 months, according to Penman.

He said the new Compaq will be customer-focused and will work with the channel to deliver better service. Penman said the company is now well placed to compete more aggressively with the likes of Hewlett-Packard and IBM.

When questioned by industry observers about the immense task at hand, Penman said history has shown that "large scale integrations and mergers don't work". However, he said this fear was the reason why so much planning had gone into the merger.

Once again, Penman emphasised the importance of the channel to Compaq. "It would be commercial suicide to erode our relationships with the channel," he said.

"As long as I'm managing director, we are going to continue that relationship (with the channel) and continue working with the channel to ensure sustainable, profitable growth."

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