HP-Compaq merger keeps revenue intact

6.00pm - By ADAM GIFFORD

Hewlett Packard and Compaq have managed to merge their New Zealand operations without going backwards.

HP New Zealand manager Russ Hewitt said combined revenues for the year to October 31 were about $600 million, which is about 5 per cent up on the previous year.

"In any merger people don't expect to hold onto the combined revenue of both companies, so we are feeling pretty good about it," Hewitt said.

HP's financial year ends in October, while Compaq had a December year end making direct comparisons different.

According to Companies Office records, Compaq New Zealand made a $2.8 million after tax profit last year on revenue of $323 million.

HP has still not filed its 2001 result, but the previous year it turnover was about $36 million less than Compaq.

Hewitt said since the merger in May 110 staff have left, including many senior HP managers. About 60 were replaced, giving current staffing of 560.

He said integrating the two companies had taken a lot of management time, making the revenue figure all the more impressive.

The two companies will become one legal entity next month, making New Zealand the first territory to do so.

While the company lost some market share in sales of desktop computers, it kept its position as number one seller of desktops, laptops and servers.

"The whole commercial marketplace is most pleasing, notebooks in particular," he said.

"Services have also held together well."

Hewitt said a lot of work was put in before the merger on technology road maps.

"That created a lot of confidence in the market place, because we were able to tell customers how we would be supporting their business going forward. Most competitors thought they would pick us up because of uncertainty in direction."

Worldwide, HP reported revenues of US$18 billion, up 9 per cent on the previous quarter. While that is US$200 million less than the HP and Compaq earned in the corresponding period last year, pro forma earnings per share jumped from 8 cents to 24 cents.

Since the merger 12,500 jobs have been cut worldwide, saving US$257 million. There was a further US$243 million in direct and indirect procurement savings, and US$157 million in other savings including cuts in marketing programmes and closing facilities.

The company is aiming for total savings from the merger of US$3 billion.