Positive outlook for new HP

The recent confusion and mixed opinions surrounding the Compaq-HP merger (which legally closed on May 3) and the likely impact it would have on current customers of the two companies appears not to have had any immediate detrimental effect on the financial performance of the new organisation. Over the last three months the two independent companies won a combined total of $5.3bn in new contracts across all industries globally, $1.5bn of these sales were for IT business services. And the manufacturing and process sector specifically provided a strong foundation with the two companies securing orders from the likes of Alstom, Amerada Hess, BMW, Ford, GM, Goodyear, Land Rover and General Mills. Earlier this month, HP told a gathering of Wall Street analysts that it expected to achieve a total of $3bn in cost savings by 2004 as a result of the merger with Compaq, revising its initial forecast of $2.5bn. The main reason for the revised savings come from two things: greater-than-expected procurement synergies and faster than expected job cuts (about 10% of the combined workforce by the end of 2003).