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H-P, Compaq make union official, promise job cuts

Carly Fiorina, chairwoman and CEO of Hewlett-Packard, and Michael D. Capellas, president of H-P, pose for photographers during the offical launch of the new company in Cupertino, California. PHOTO: AFP

The merger of Hewlett-Packard and Compaq became official Tuesday with HP chief executive Carly Fiorina wavering on a promise not to cut more than 15,000 jobs.

Fiorina announced the formal launch of the combined firm following the US$20 billion tie-up between the technology giants, which was hotly contested by shareholders, led by HP co-founder heir Walter Hewlett.

The combined companies, which will operate under the HP nameplate, will re-organize into four divisions and re-brand some of its products.

Fiorina also reiterated plans to trim 15,000 jobs from payrolls worldwide, starting Monday, with most layoffs completed within six to nine months.

But she also said the number of layoffs may be greater than 15,000 because jobs will be eliminated in some areas with new ones created in other sectors.

Merger opponent Walter Hewlett had argued that HP would cut up to 24,000 jobs after the merger. Fiorina, asked if she would guarantee that the job cuts would be limited to 15,000, replied, "The only guarantee is business success."

The firm also announced its so-called "roadmap" for its new combined product lines. The HP brand will rule the company's server line, while the Compaq label will dominate the company's business computer models. Consumer models will sport both HP and Compaq logos. Meanwhile, the HP handheld Jornada computer will be discontinued, and the popular iPaq made by Compaq will be rebranded as the HP iPaq.

Fiorina, dressed in a purple suit, presided over the launch ceremony at the Cupertino campus of HP as New Age jazz music played in the background.

She said despite the slowdown in the information technology industry, the company is prepared to move forward.

The new Hewlett-Packard is ready "to lead change instead of being swallowed up behind it," she said.

In a reference to the bruising shareholder battle at the Silicon Valley firm over the acquisition of Compaq, Fiorina said the battle has made the company stronger.

"We have forged a very strong team by going through the difficulties of the last few months," she said.

Much of the integration has already begun, she noted: the firms have a unified Web site and division managers have "scorecards" that set out goals for the firm's divisions.

She reiterated her expectations that the merger would yield US$2.5 billion in cost savings in the first year, with revenues down by about 4.9 percent because of duplication of product lines.

Michael Capellas, the former Compaq chief who is now HP president, said the firm would continue to focus on making products for the digital world.
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