Fears HP-Compaq merger will hit service

As the backers of the impending Hewlett-Packard-Compaq merger brace for a legal challenge next week, New Zealand systems integrator gen-i fears the new entity could become a bureaucratic monster.

As the backers of the impending Hewlett-Packard-Compaq merger brace for a legal challenge next week, New Zealand systems integrator gen-i fears the new entity could become a bureaucratic monster.

HP says it expects a certified tally of the March 19 shareholder vote to show a majority in favour of the acquisition of Compaq. The company remains “optimistic” that it can complete the merger process as planned, despite an April 23 hearing of a court application by board member Walter Hewlett to block the deal. Hewlett claims HP improperly solicited votes from large shareholders.

Gen-i head Garth Biggs says he hasn’t received any adverse reaction from customers about the merger but he is “concerned they will become distracted for the next six months” and “multinational-mindedness” could see New Zealand’s needs sidelined.

Biggs says the HP and Compaq New Zealand heads, Barry Hastings and Russell Hewitt respectively, have been “personally strong enough” to avoid this but he fears the leader of the new entity will lose that flexibility.

“At a personal level, we know these people. They are our friends. We are worried about them,” he says.

Biggs says in corporate restructures like this, quick decision-making and one company wanting to win more than the other means “quality decisions do not necessarily follow”.

He also has concerns over the merger reducing his own firm’s product range and limiting market competition.

“Choice and flexibility is being reduced; that reduces the industry’s competitiveness.”

Flora McGuire, marketing manager of Eagle Technology, says she does not expect any “degradation of quality of product or service”. She was unsure what might happen to the product ranges but had no particular concerns.

HP New Zealand’s Hastings says the country and South Pacific regional structures have still to be settled for the merged company. They may also have been affected by the sudden death last month of Australia-New Zealand managing director Norman McCann.

Hastings says despite the impending merger, Compaq and HP people were “still competing in the marketplace as always”.

Hastings says the new HP hopes to present new sales teams and identify business account managers to them within 30 days of the merger announcement.

The merged entity is likely to formally exist in May, the company said in a statement filed with the US Securities Commission last week.

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