Compaq CEO outlines road map for NZ

Compaq has outlined its roadmap for the merger with Digital, saying the new senior management team will be announced in a month's time, and redundancies in October. Just over a week ago Robin Paterson, the former general manager of Compaq New Zealand, was appointed managing director of the combined company. The head of Digital New Zealand, Sue Leikis, has a senior management role within the new company.

Compaq last week outlined its roadmap for the merger with Digital, saying the new senior management team will be announced in a month's time, and redundancies in October.

The $US9.6 billion acquisition of Digital occurred last month, and just over a week ago Robin Paterson, the former general manager of Compaq New Zealand, was appointed managing director of the combined company. The head of Digital New Zealand, Sue Leikis, has a senior management role within the new company.

Under the first stage of the merger, Compaq and Digital will have their own senior management teams that report to Paterson. However, a single management team will be announced by August 3 and departments within each organisation will report to that team.

From August 3 until October the departments will progressively begin to be integrated into the new company.

Compaq has 80 staff (including Tandem) and Digital has 240. The number of redundancies in New Zealand will not be known until October.

Compaq in the US announced 5000 layoffs last week. In total it plans to cut its 84,000-person workforce by 17,000 people: 15,000 from Digital and the remainder from Compaq and its Tandem Computers unit.

Paterson says he doesn't know how many redundancies will occur in New Zealand, but he believes it is highly unlikely it will be as high as the worldwide percentage. He concedes there are undoubtedly some areas of duplication.

"[But] if you look at the opportunity for consolidation and for synergy a lot of that exists at headquarters level ... and manufacturing level, but far less of it exists at a country level."

Of redundancies he says: "It's not fun, it's not nice, pleasant or enjoyable in any way. But ... the long-term viability of the company and giving the customers the value that they want are really what's driving it." He says the changes give people within both organisations an opportunity to look at different careers within the new organisation.

It is likely that in Auckland the current three locations (Onehunga, Symonds St and Grafton Rd) will all be used under the new structure. In Wellington it's likely everyone will move into the Digital building, while in Christchurch, Hamilton and Dunedin there is unlikely to be any change.

Paterson also addressed the issue of the channel which has been of interest because of the two companies' different approaches. He says that the new Compaq is leaving it to customers to decide whether their relationship will be direct or indirect.

"There will be one caveat on that: it is dependent on our ability to deliver. If we had 10,000 customers and they're all wanting high-touch relationships with Compaq that's not going to be viable."

Current direct relationships will continue. However, Compaq is still a channel-focused organisation.

"Sixty-five per cent of the business is delivered by the channel in New Zealand." That equates to $155 million a year.

Paterson says a number of channel partners are common to both companies — such as Computerland, Wang, Datacom and Southmark. By August the Digital-specific channel will be approved to sell Compaq. There will also be an ongoing review of the channel structure.

Digital products will transition to the Compaq brand during the next 12 months. Paterson says that doesn't mean that the Digital product will disappear. The better technology will win. "Digital has had some excellent technology in many of its products, particularly in the portables area."

Paterson says both companies brought strengths and weaknesses to the merger, but together they had a phenomenal product range, a broad range of services and strong organisational capabilities.

The acquisition makes Compaq the largest computer manufacturer in the world and the number two computer company both worldwide and in New Zealand, behind IBM.

Globally the second quarter will be "a bit flat" for Compaq, but it's optimistic of strong growth in profitability within the next 12 months.

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