HP ups merger savings estimates

Hewlett-Packard raised its estimates on cost savings from its acquisition of Compaq Computer and set a schedule for completing the 10 per cent workforce reduction that it started after closing the $18.7 billion (€19.8 billion) deal in early May.

Hewlett-Packard, which following the merger employs about 4,500 people in Ireland, expects to cut 10,000 jobs by November 1st and another 5,000 jobs next year, a total of about 10 per cent, chief executive Ms Carly Fiorina said yesterday in the company's first meeting with analysts since purchasing Compaq last month.

Ms Fiorina also said she saw $500 million in cost savings by the end of fiscal 2002 and $2.5 billion by the end of 2003. By 2004, she sees those cumulative cost savings rising to $3 billion, above Hewlett-Packard's initial target for total savings of $2.5 billion.

Hewlett-Packard promised investors the $2.5 billion in cost savings when it proposed buying Compaq last September and throughout the hotly contested merger process. The merger, opposed by Mr Walter Hewlett, a large shareholder and son of Hewlett-Packard co-founder, finally closed at the beginning of May.

"We are moving faster and achieving more," Ms Fiorina told the meeting in Boston. "We set some stakes in the ground on September 4th. We think they were appropriate then. We think they are appropriate now."

Ms Fiorina also said that technology customers were still pushing back spending.

She added that she did not intend to take an increase in salary until Hewlett-Packard employees got increases. That would not happen until the company was finished cutting jobs, she said.

Hewlett-Packard said it expected PCs to continue to lose money in the second half of 2002, but Hewlett-Packard president Mr Michael Capellas said the company expected the PC business to return to profitability in 2003.

In its financial forecasts, Hewlett-Packard said it expected revenues in its personal systems group to decline in the second half of fiscal 2002 from the first half. It said it expected overall revenues of $35 billion to $36 billion in the second half and then growth of 4 per cent to 6 per cent in fiscal 2003.

In documents posted on the company's website, it said that it expected revenues to grow 7 per cent to 9 per cent in fiscal 2004. - (Reuters)