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Crespo: Hewlett-Packard Puerto Rico’s Expectations Fair

Merger’s effect on local operations should be minimal


June 20, 2002
Copyright © 2002 CARIBBEAN BUSINESS. All Rights Reserved.

The company-wide 15,000-job cut proposed by the merger of the Hewlett-Packard Co. and Compaq Computer Corp. may not have a significant impact on Puerto Rico operations, said Hewlett-Packard Puerto Rico’s Manufacturing Organization Operating Manager Lucy Crespo.

"Last August, when we cut 50 jobs [at the Aguadilla complex] in tune with the company’s work force-reduction program, it was out of nearly 1,800 employees," said Crespo. "We don’t have any definite data at this point, but in terms of general expectations, we don’t have any negative feedback about our operations. But if some should occur, it will be minimal."

In 2001, Hewlett-Packard’s net revenue decreased 7.6%, to $45.2 billion from $48.9 billion in 2000. Net earnings that year were down dramatically, 82.7% to $624 million, or $0.32 diluted earnings per share, compared with $3.5 billion, or $1.80 diluted earnings per share, in 2000.

"The merger of both companies is balanced, and the best of each group is going to be kept," assured Crespo. "As we have seen so far, the Hewlett-Packard brand is being kept, but we are also taking advantage of Compaq’s brand to develop new products. The intention is to create a new culture that has the best of both worlds."

The company expects to eliminate approximately 10,000 jobs by November, with the other 5,000 cuts coming in 2003. During a June 4 meeting with Boston financial analysts, HP CEO Carly Fiorina did not rule out that more than 15,000 jobs could be cut if market conditions worsened.

Hewlett-Packard estimated second-half revenue to be $35 billion to $36 billion, in accordance with Thomson Financial/First Call’s $36 billion estimate. Sales are expected to grow 4% to 6% during 2003 and 7% to 9% in 2004. The company did not comment on earnings-per-share estimates, but Thomson Financial/First Call predicted earnings of $0.20 per share for Hewlett-Packard’s third quarter and $0.26 per share in the fourth quarter.

Hewlett-Packard’s $19 billion buyout of Compaq was approved six weeks ago after an acrid battle with board member and founder’s son Walter Hewlett. Hewlett sued Fiorina in a Delaware court, accusing her of lying to shareholders about financial projections and of buying votes from a key investor prior to the merger vote. The lawsuit was dismissed, however, and Hewlett no longer sits on the company’s board of directors.

This Caribbean Business article appears courtesy of Casiano Communications.
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