Tue, Mar 19, 2002 - Page 17 News List

H-P merger could harm local orders

COMPUTERS Notebook PC and parts makers may see demand decline if the US-based giant's plan to merge with Compaq is permitted to take place

By Dan Nystedt  /  STAFF REPORTER

The proposed merger between Hewlett-Packard Co and Compaq Computer Corp could send ripples across Taiwan's computer industry if it goes through, analysts said yesterday.

The two firms may source as much as US$14 billion from the nation's notebook and desktop computer parts makers, statistics show.

The largest computer industry merger this century will be decided today by a vote from H-P shareholders, ending a five month battle between H-P and a descendent of one of the company founders, William Hewlett, who opposes the merger.

In Taiwan, the decision will have a multi-million-dollar impact on companies such as notebook makers Inventec Co (英業達), Quanta Computer Inc (廣達電腦), Compal Electronics Inc (仁寶電腦) and computer parts makers such as Gigabyte Technology Co (技嘉科技), Micro-Star International Co (微星) and Nanya Technologies Corp (南亞科技). These firms stand to gain or lose orders as a combined H-P and Compaq -- a US$87 billion goliath -- will likely consolidate product lines and orders, as well as squeeze the lowest price out of component makers, analysts say.

Last year, Compaq was the largest single foreign purchaser of Taiwanese information technology gear, scooping up US$9.7 billion in locally produced goods.

The company expects to boost purchases this year to around US$10 billion or more depending on the world economy, Compaq officials said last year. H-P spent around US$4 billion in Taiwan last year, but the firm has not released a forecast for this year.

The companies purchased goods ranging from notebook computers, computer components, monitors, printer components and the iPaq personal digital assistant from Taiwan last year.

According to one industry insider, the two companies' outsourcing units have already been working out details of a plan to ensure they can enact cost-cutting measures as soon as the merger is settled. In the event of a tie-up, two local firms set to receive hefty new orders are Tatung Co (大同) and Mitac International Corp (神達), he said.

The two companies stock prices have more than doubled from lows hit in early October of last year. Tatung closed yesterday at NT$11.95, up 243 percent from its low of NT$4.9 on Oct. 8, and Mitac ended at NT$19.5, up 225 percent from its Oct. 4 close of NT$8.8 per share.

The deal, however, may never materialize. William Hewlett has already gained strong support for his case against the merger, including the largest shareholder of the company, the David and Lucile Packard Foundation. Combined, the Packard Foundation and Hewlett control 18 percent of the firm started by their parents.

An indication shareholders might vote against the plan is the fact H-P's stock dropped 18 percent on the day of the announcement. Analysts say there is still a 50-50 chance the merger will go through. The vote will take place in Cupertino, California, today.

This story has been viewed 3322 times.
TOP top