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HP/COMPAQ - With deal closed, countdown to new HP begins

HP/COMPAQ - With deal closed, countdown to new HP begins

With the legal closing of its Compaq Computer acquisition on Friday, and a turbulent nine months behind it, Hewlett-Packard is at last poised to commence merged operations.

Compaq's run on the New York Stock Exchange as an independent company is ending. Before trading opens in the US on Monday, Compaq's ticker (CPQ) will be suspended, and HP's will convert from HWP to HPQ, a gesture HP chairwoman and chief executive officer Carly Fiorina said is intended as a tribute to the contributions of both companies in forming the new HP.

HP has scheduled customer, media and analyst briefings for Tuesday in the US, the official launch of the newly merged company, according to spokeswoman Rebeca Robboy. Day One -- as HP refers to it -- will bring some of the information customers and employees have been craving during the drawn-out acquisition approval process, she said. Product roadmaps and branding plans are among the first items on the communication agenda.

HP and Compaq claim to have dedicated some one million working hours to integration planning -- a thoroughness that's likely to pay off in the most well-organised transition plan in IT merger history, according to Gartner analyst Paul McGuckin.

But customers could be in for some shocks once HP's product plans become clear. McGuckin anticipates that HP will use the acquisition as an opportunity for "radical housecleaning", along with the expected killing off of redundant product lines.

Particularly at risk are Compaq's OpenVMS and Tru64 Unix software and HP's Netaction infrastructure software, McGuckin said in a recent research note.

Buyers can best take advantage of the instability by negotiating steep discounts as HP seeks to demonstrate its strength by winning new business and retaining old customers at nearly any cost, McGuckin said. He also expects further price cuts on high-end storage and servers, as HP and other vendors fight for market share.

Also still in limbo will be HP's employees, who have since September been jittery about the company's announced plans to cut 15,000 people from the combined company. While announcing product and branding plans is a top priority, personnel decisions will come gradually throughout the next year, according to HP.

Customer-facing organisations, such as sales and support, will be the first to be reorganised, HP said in an early April regulatory filing. Other units will be streamlined through a process HP calls "adopt and go": Teams selected for retention will be plugged as nearly complete entities into the new HP, while others will be jettisoned entirely.


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