Industry Greets Hewlett-Packard/Compaq Merger With Skepticism - KFVS12 News & Weather Cape Girardeau, Carbondale, Poplar Bluff

Industry Greets Hewlett-Packard/Compaq Merger With Skepticism

Tough times in the computer industry prompted a big announcement Tuesday - a proposed merger between Hewlett-Packard and Compaq.  Government anti-trust regulators will probably approve this merger in the end, but that doesn't mean it's going to be a marriage made in heaven. Former arch-rivals, the CEO's of Hewlett-Packard and Compaq made a friendly show of the merger announcement at a planned media event.  "The combination changes the game, and we're looking to win," said Carly Fiorina, who will be the CEO of the newly-joined proposed company.  But closer to the truth is the fact that these two computer-makers have both been struggling to win for some time against #1 computer-maker Dell, and a bigger Hewlett-Packard may have an even tougher time keeping up with nimble Dell.  Hewlett-Packard buys Compaq for 25-billion in stock, and the Compaq brand will be eliminated.  Carly Fiorina will be the CEO, and Compaq President Michael Capellas the president of the new company, and both say the merger will eliminate 15-thousand jobs right off the top. Wall street didn't much like the deal.   Both stocks hit new 52-week lows on deep concerns about how well both companies will handle the merger.  "If this works, this will go down as one of the most bold moves ever seen in the technology industry.   However, with that potential for glory comes the potential for great disaster because ths is going to be a very difficult one to do in a difficult environment,"  says Toni Sacconaghi, an industry analyst with Sanford C. Bernstein & Co. The deal leaves Dell, Gateway and IBM as the other wary survivors in a business that is suffering from bottom-line prices, and declining sales.  Compaq computer owners everywhere want to know if this will leave them and their machines in the lurch.   You'll be buying a new computer before this deal is ever complete, and it's likely H-P will honor Compaq's warranties.  

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