HP/Compaq to keep Euro sales and services staff

Hewlett-Packard and Compaq will not axe its European-based sales and service employees, said HP's chairman and chief executive...

Hewlett-Packard and Compaq will not axe its European-based sales and service employees, said HP's chairman and chief executive officer, Carly Fiorina, on 17 September.

"We will not be cutting back on feet on the street [in Europe]. With this one move we have doubled the size of our sales force and doubled the size of our professional services," Fiorina said in a question and answer session at the IDC European IT Forum.

She took questions after a keynote speech delivered via satellite because of travel restrictions following the terrorist attacks on the US.

But European management at "the new HP" will be hit, as the company seeks to make annual savings of $2.5bn (£1.7bn), largely by slashing 15,000 jobs.

"We have overlapping management in some cases. That's a question of making personnel decisions in as rapid a manner as we can," Fiorina said, noting that the management structure at HP and Compaq across Europe is very similar.

Fiorina also said the Compaq brand won't disappear.

"Compaq isn't going away. The Compaq brand has a lot of equity. We will be using the Compaq brand in some of our products," she said.

Fiorina defended the takeover of Compaq and responded to criticism voiced by analysts and others that the merger is a defensive move and in response to PC market consolidation.

"This is not about PCs but about enterprise computing. The real synergies in this merger come from enterprise computing, not PCs. This is not a defensive move. It is an offensive move. About leading, not following. We intend to reshape the economics of the industry, and our competitors will follow," she said.

Fiorina touted "market-unifying standards and architectures", which HP/Compaq intends to follow, as the way ahead for the technology industry. She criticised rivals IBM and Sun Microsystems as businesses that "sell to the customer once and collect proprietary margins for years to come".

Fiorina also took a swipe at Dell, saying that vendors who base their business model solely on volume and velocity would not be able to survive in the long term because of a long-term lack of research and development, marketing and sales power.

Talking about services, Fiorina said that the combined HP and Compaq did not match rival IBM, but could compete by acquisitions or by partnering.

"Certainly we are not yet of the [same] scale as an IBM in the area of outsourcing and consulting. We would need to either grow organically or do some opportunistic acquisitions. We are a strong partner of Accenture, PricewaterhouseCoopers and KPMG. We have an opportunity to solidify a certain set of new partnerships, and interestingly all of those partners have a common enemy," she said.

Commenting on the impact of last week's terrorist attacks in the US, Fiorina said: "I do not see a rebound at any time in 2001; it is more likely in the second end of 2002. It would not be a hockey stick rebound, but a gradual rebound. With last week's events, honestly, it is very difficult at this point. It is too soon to tell."

Fiorina maintained the merger would not be affected by the attacks in the US or by the slide of HP and Compaq stock prices that followed the merger announcement.

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