Hewlett-Packard Co. and Compaq Computer Corp. have formed a “launch team” and increased the number of employees working on integration efforts while they await official certification of last weeks shareholder votes clearing the way for their $22 billion merger.
The stepped-up efforts, disclosed Tuesday, reflect HPs confidence that it won enough support from shareholders to go forward with the deal, even though the company hired to certify the count has yet to complete its tally, and despite contentions from merger opponent Walter Hewlett that the vote is too close to call.
Yet, even as merger efforts pick up steam, HP and Compaq employees were advised in an internal memo Tuesday that the two companies must continue to operate like rivals until the proxy votes are certified and legal documents are finalized.
The message, sent by HPs Webb McKinney and Compaqs Jeff Clarke, the two executives in charge of merger integration efforts, summarized some of the final preparations under way, but disclosed little in the way of new details about the merger.
“Please remember that Compaq and HP are required by law to function as competitors until legal close and the new company officially launches,” the memo from McKinney and Clarke states.
Nevertheless, McKinney, president of HPs Business Customer Organization, and Clarke, Compaqs chief financial officer, touted heightened preparation efforts already under way.
“The successful integration of these two great companies is a tremendous challenge,” the memo says. “But it also represents an unprecedented opportunity to create a strong competitor, accelerate growth and extend our industry leadership.”
Aside from noting that more than 1,200 HP and Compaq employees are now working full-time on merger planning, up from 900 earlier this month and 400 late last year, the most noteworthy news revealed in the memo was that the companies have formed a launch team “focused on planning all activities and deliverables required for a successful launch.”
Among its duties, the launch team will:
- Distribute letters from HP Chairman and CEO Carly Fiorina, new HP President Michael Capellas (Compaqs chairman and CEO) and others to employees, customers and business partners;
- Produce product road maps, go-to-market strategies, service and support offerings, etc., to employees, analysts, customers and partners;
- Distribute detailed information to employees about internal integration plans, including organizational structure, selection processes, etc.;
- Develop outreach programs for employees, customers and partners; and
- Produce toolkits and playbooks for customer-facing employees outlining processes and procedures for engaging customers as the “new HP.”
“We have nearly completed the four-phase integration planning process,” the message from McKinney and Clarke said. “One of our key goals from the start of this process was to make sure the new company would be prepared to open its doors and hit the ground running in the April-May timeframe. We are on target to reach this goal.”
Before the companies can officially merge, they must await a certification of last weeks shareholders vote by IVS Associates Inc. of Newark, Del. Last week, an IVS representative said tallying the vote could take several weeks.
Should the ballot count confirm HPs assertion that it won enough support to proceed with the merger, HP and Compaq must then complete and file necessary legal documentation with various regulatory and government agencies.
But even when the launch date is set, and despite six months of integration planning, the executives cautioned that the massive task of merging the two large computer makers wont happen overnight.
“It is not realistic to expect that every decision regarding the new organization will be finalized or announced on launch day,” the memo to HP and Compaq workers states. “We must give top priority to decisions that maximize continuity and minimize service interruption in our customer-facing organizations.”
About 15,000 jobs will be eliminated as the result of the merger of HPs 85,000-employee work force with Compaqs 63,000 employees, according to representatives of the two companies. However, industry analysts have speculated that the actual number of layoffs within the first year of the deal will likely exceed 20,000.
Should the merger be completed, HP will emerge as a powerful new competitor in the high-tech arena, becoming the market leader in sales of personal computers, enterprise storage, Windows- and Unix-based servers, and imaging and printing.
Together, HP and Compaq sell products into more than 160 countries and have a combined annual revenue of nearly $90 billion.
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