HP Leaders Still Selling Acquisition of Compaq

Hewlett-Packard Co. rolled out a series of printers, a mobile workstation and a $50 million partnership with Microsoft Corp. to promote its .Net Web services initiative at the companys HP World Conference and Expo here last week.

But the focus of remarks made by Chairman and CEO Carly Fiorina and President and Chief Operating Officer Michael Capellas were aimed mainly at the 8,000 customers and partners at the event to try to restore their confidence in a company hurt by sagging sales and efforts to pull together its $19 billion acquisition of Compaq Computer Corp. in May.

Whether the executives succeeded depended on whom you talked to. Finn Anderson, a systems manager for Novo Nordisk A/S, a pharmaceutical company based in Copenhagen, Denmark, said he initially questioned the Compaq deal. However, Fiorinas talk put his questions to rest.

"After hearing her speech, I now think the merger was a good idea. Before that, I wasnt sure she made the right decision," Anderson said.

But others expressed worries that such massive mergers eliminate value and reduce choice. "I was concerned when Compaq bought [Digital Equipment Corp. in 1996]. DEC was a good company, and I liked it, but now theyre gone, their stuff is gone," said Sid Shapiro, systems administrator at Bio-Rad Laboratories Inc., in Hercules, Calif. "Im concerned that there is too much consolidation."

In her keynote speech, Fiorina said the deal bolstered the Palo Alto, Calif., companys position in the industry.

"Today we are in a much better position to serve you than we were a year ago," Fiorina said. "We think that other competitors are now reacting to us."

One analyst agreed but said its because HP competitors see the absorption of Compaq as a distraction for HP. "Its really a mix of things," said Rob Enderle, at Giga Information Group Inc., in San Jose, Calif. "In some cases, companies are adjusting to a changing market, but in Dell [Computer Corp.s] case, theyre making changes to take advantage of what they see as a weakened HP."

The slumping economy, however, has made HPs integration of Compaq more difficult. Last week, HP said it will cut 1,800 more jobs above the 15,000 cuts it announced after the acquisition.

HP executives nevertheless pressed on at the show with product announcements. HP touted new commercial and consumer printers, including its fastest color printer to date, the LaserJet 5500, which can produce up to 21 pages per minute and costs $3,249. HP also unveiled its lowest-priced color laser printer to date, the $999 LasetJet 2500, and a mobile color printer, the $299 Deskjet 450, which can be equipped for Bluetooth wireless connectivity.

HP announced a mobile workstation, the Compaq Evo N800w, starting at $3,899, which features advanced graphics and a 60GB hard drive.

Executives said the company was partnering with Microsoft , of Redmond, Wash., in a $50 million campaign to promote Microsofts .Net Web services initiative. The partnership will involve training about 5,000 HP sales representatives on the software and certifying 3,000 HP service workers on .Net, with HP pledging to add 1,800 salespeople to promote the initiative.