Irish job cuts likely with or without merger

Job cuts are likely at Hewlett-Packard and Compaq's Irish operations whether the $21 billion (€23.8 billion) merger between the two US technology firms goes ahead or not.

But most analysts believe they will be limited. They say the key requirement for yesterday's vote is to provide clarity to customers.

Hewlett-Packard and Compaq employ about 4,000 people in manufacturing, sales, finance, software development and technical support centres in Ireland. Both firms have indicated they would cut 15,000 jobs globally following a merger and some observers believe this figure may rise.

Certain functions in the Republic, such as administration, management and finance, would be vulnerable should the merger go ahead, according to Mr Barry Dixon, technology analyst with Davy's Stockbrokers.

"The job count will go down, but not significantly ... the level of overlap in Ireland is limited to sales and marketing and administration," he said. "Hewlett-Packard is mainly a manufacturing business in the Republic while Compaq is a services firm."

The Republic may benefit from the robust performance of Compaq's services centre in Dublin and Hewlett-Packard's inkjet printer manufacturing operation in Leixlip. Both divisions have recorded strong local results despite the downturn in the general technology industry and would be unlikely to be affected in a merger.

Hewlett-Packard's PC business and Compaq's server business have been highlighted as areas likely to suffer most through product integration. These are mostly based abroad.

Job cuts would probably have to be made even if the merger is rejected due to a continuing downturn in some technology sectors and the likely negative reaction to rejection in a ballot.

"Both companies have a lot to lose if the merger doesn't go ahead and are likely to be weakened in the marketplace if this happens due to confusion," said Ms Rita Sfeir, an analyst with IDC, a London-based research group. "Firms like IBM and Dell are benefiting due to the confusion at the moment and are picking up clients who want back-up."