Hewlett-Packard Buying Compaq
PALO ALTO, Calif. (AP) _ Hewlett-Packard is buying fellow computer maker Compaq Computer for an estimated $25 billion, a deal meant to bolster two companies that have been saddled with sagging profits and massive job cuts, the companies announced Monday.
The deal would create a computer behemoth that would rival industry leader IBM. In its most recent 12 months, Hewlett-Packard reported revenues of $47 billion, while Compaq had revenues of $40 billion. The combined amount would be only slightly lesser than IBM’s $90 billion.
Hewlett-Packard Chief Executive Carleton ``Carly″ Fiorina, 46, who would continue to be chief executive of the combined company, said the deal ``vaults us into a leadership role with customers and partners _ together we will shape the industry for years to come.″
The new company would have annual earnings of $3.9 billion and operations in more than 160 countries and 145,000 employees.
The reported deal comes as the computer industry suffers through a downturn that has seen sales shrink considerably. Hewlett and Compaq’s stocks suffered drastically in recent months.
The companies have blamed their woes on worsening economic conditions and intensifying price wars in Europe.
Compaq’s stock closed at $12.35 on the New York Stock Exchange on Friday, down 76 percent from its peak in early 1999. Hewlett-Packard’s stock is worth $23.21, down 66 percent from its high last summer.
Compaq has announced 8,500 job cuts, while Hewlett-Packard is slashing 6,000 jobs.