HP and Compaq stocks slip on merger news

Wall Street voted with its feet on the Hewlett-Packard/ Compaq deal on Tuesday morning, with both stocks falling as market analysts question the impact of the deal

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By  Mark Sutton Published  September 4, 2001

Wall Street has been giving its reaction to the news of Hewlett-Packard’s purchase of Compaq. Shares of both companies dipped as trading began on Tuesday, with HP down 14% and Compaq down 5% on Monday’s close.

At a meeting with financial analysts in New York on Tuesday, Compaq chief executive Michael Capellas said that the move would mean the loss of 13,000 jobs worldwide, as the company chases savings of $2.5 billion per year.

The losses will follow on from cuts of 8,000 jobs at HP and 6,000 at Compaq earlier in the year. The merged entity will employ some 150,000, 44,000 in the EMEA region.

Fears that financial regulators in Europe and the US would block the move were allayed by HP chief executive Carly Fiorina, who said that divestitures would be made as necessary, although she did not go into detail. The two control an approximated 76% of the retail PC segment in the US, and need regulatory approval before the merger can go through.

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