HP and Compaq married and ready to move in together

Hewlett-Packard Polska will complete its full integration with Compaq Computer Polska by the end of the year and will focus its strategy increasingly on the lucrative market for IT consulting and outsourcing services, company officials said last week. HP officially launched the new company, called Hewlett-Packard, on May 7. It is the world's largest IT marriage ever, weighing in at $18.7 billion. The decision to merge the two companies was made last September but the shareholders of both companies had to approve it. The actual legal merger in Poland will be completed by Nov. 1, the end of HP's fiscal year. Also by year-end, all remaining employees in Compaq's office will be moved to HP's headquarters, although the relocation has not started yet, according to Inga Kasak, an HP Polska spokeswoman.

As the largest high-tech company in Poland with about 18% of IT market share, HP now employs 600 workers with 400 from the old HP Polska and 200 from Compaq Polska. HP Polska's revenue in 2001 was $373.1 million, while Compaq's was $140.3 million. HP's, California-based parent company said the merger would enable it to achieve annual cost savings of at least $2.5 billion, while keeping revenue losses at 5%, but Kasak said it was too early to determine the amount of cost savings for the Polish operations. Merger costs for the Polish operations, including retention bonuses and voluntary buyout packages as well as other expenses, are still unknown, she added. Although the parent company expects to lay off about 10%, or 15,000, employees from its global workforce in 160 countries with reductions starting last Monday, job cuts in Poland would be less than 10%, said Andrzej Dopierała, HP Polska's president and director of the firm's enterprise systems group, since neither HP nor Compaq has duplicate factories here making the same products. He said he could not indicate the precise number of layoffs but that there would be headcount reductions in management, administration and possibly the marketing department. Compaq's computer assembly plant in Szczecin, which employs 60 workers, would remain in operation, he said.

Focusing on services The new company will focus on four business groups, including enterprise systems, imaging and printing, IT consulting and services and computer systems. Worldwide HP will beef up its push into the highly profitable areas of IT consulting and outsourcing services, and Poland will likewise follow suit as part of its post-merger strategy. It's an area where both Compaq and HP's archrival IBM, the U.S. computer giant, have raked in revenue. "It's one of the most important factors that made HP merge with Compaq (which) had a strong services organization," Kasak said. "We will definitely move forward with it in Poland." She said she could provide no further details about the strategic shift. Jacek Stochlak, HP's director of services, was unavailable for comment late last week.