The $25 billion mega-merger of Hewlett-Packard (HP) and Compaq could lead to job losses in Ireland as the companies look to cut costs, industry experts said today.
Technology analyst at Davy Stockbrokers in Dublin Mr Barry Dixon said today although the two firms' Irish operations were quite compatible, some form of rationalisation was inevitable.
The two companies, which between them employ almost 4,000 people in Ireland, have come under pressure recently as the PC and computer equipment markets show continued weakness.
HP has a printer-cartridge manufacturing business in Leixlip, Co Kildare, and a significant sales and consulting business. The two businesses combined employ about 1,600 people.
Compaq employs about 2,200 people in its mainly sales and R&D divisions in Dublin, Belfast and Galway.
The merger creates a behemoth with 145,000 employees and $87 billion in revenue that is about the size of IBM, with products in the personal computer business and in computer servers, printers and high-tech services.
Compaq and HP are second and fourth in worldwide PC sales, but their combined total would surpass leader Dell Computer, according to the most recent figures from Gartner Dataquest. Compaq ranks first in worldwide server sales; HP is fourth.
"This is a decisive move that accelerates our strategy and positions us to win by offering even greater value to our customers and partners," said HP chairwoman and chief executive Ms Carly Fiorina, who will keep those posts at the merged company.
The deal "vaults us into a leadership role with customers and partners - together we will shape the industry for years to come," she said.
Compaq chairman and chief executive Mr Michael Capellas will be president.
After the merger closes, expected in the first half of 2002, the new HP will be 64 per cent-owned by HP shareholders and 36 per cent-owned by Compaq shareholders. Mr Capellas and four other Compaq directors will join HP's board.
HP and Compaq said the deal would save them $2 billion a year by 2003, but Gartner Dataquest research fellow Mr Martin Reynolds said that will not be easy. Both companies, he said, have long product lines that customers will not want to see phased out.
The deal comes as the computer industry suffers a declining sales trend blamed on a saturated market and the slumping worldwide economy.
additional reporting AP