Magazine

Table: A Post-Merger Checklist


Workers from HP and Compaq have spent more than 1 million hours planning their merger. Here's how they're doing:

CHALLENGE: CHOOSING PRODUCTS

Abruptly killing off redundant products might scare customers and deflate revenues. But costly overlap remains: HP still sells 62,000 of the two companies' 85,000 products.

PROGRESS: POOR

CHALLENGE: TRIMMING FAT

With at least $1 billion in savings from procurement alone, HP (HPQ) now says it can cut costs by $3 billion annually by 2004. Still, the 15,000 layoffs have just begun and will take more than a year to complete.

PROGRESS: GOOD

CHALLENGE: FIXING THE PC BIZ

Fiorina kept both PC brands. That'll help hang on to shelf space in stores, but it's not the radical change needed to boost efficiency and margins. Instead, she needs to streamline her supply chain and do more direct selling--just like rival Dell Computer (DELL).

PROGRESS: POOR

CHALLENGE: KEEPING KEY STAFFERS

Handing out $55 million in retention bonuses prevented a brain drain. And Fiorina didn't play favorites: Compaq execs got responsibility for half of total revenue.

PROGRESS: GOOD

CHALLENGE: BOOSTING MORALE

Many workers opposed the merger, and Fiorina hasn't yet made peace with those foes. Instead, she's hoping to get rid of any malcontents with buyout offers to 9,000 employees.

PROGRESS: POOR

CHALLENGE: AVOIDING CULTURE CLASHES

Staffers say turf battles are raging between HP and Compaq folks. Fiorina is using that tension to shake things up, but it may backfire if workers from HP's more laid-back culture lose too many fights.

PROGRESS: FAIR


Steve Ballmer, Power Forward
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