High-tech giant Hewlett-Packard is buying rival Compaq Computer for about US$25 billion in a blockbuster merger that should shake up the struggling computer industry -- to the benefit of Taiwanese manufacturers.
The stock swap announced Monday night unites two companies with a proud history but a difficult recent past.
H-P and Compaq both have been hurt by technology sector downturns in the past year and each company imposed layoffs to deal with shrinking profits.
The merger creates a behemoth with 145,000 employees and US$87 billion in revenue -- about the size of IBM Corp -- with products not only in the personal computer business but also in computer servers, printers and high-tech services.
Compaq and H-P are No. 2 and No. 4 in worldwide PC sales respectively, but their combined total would surpass leader Dell Computer, according to recent figures from Gartner Dataquest.
Compaq ranks first in worldwide server sales, while H-P is fourth.
In Taipei, stocks rose on the news, led by Asustek Computer (
"People think that after the merger, there will be order consolidation" and Asustek may get more sales, said Teresa Chen, an analyst at Deutsche Securities in Taiwan.
Asustek surged NT$8.50, or 6.7 percent, to NT$135.50. Chen said Asustek ships between 12 percent and 15 percent of its motherboards to H-P.
Compal Electronics (仁寶電腦), which counts H-P as its second-largest customer, rose NT$2.20, or 7 percent, to NT$33.70.
Quanta Computer (
The deal comes as the computer industry suffers through declining sales -- a trend blamed on a saturated market and the slumping worldwide economy.
Compaq lost US$279 million in the most recent quarter; H-P posted a net profit of US$111 million in its last quarter, but that marked an 89 percent decline from the previous year.Also See Hewlett
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