The merger between computer marketers Hewlett-Packard Co. and Compaq Computer Corp. will generate $500 million in cost savings during fiscal 2002. It will also include a 15,000-person reduction in work force, according to reports.
Hewlett-Packard will trim 10,000 positions from its operations before Nov. 1, with another 5,000 scheduled for the next fiscal year. Hewlett-Packard and Compaq’s combined employee base is roughly 150,000. The reductions will come largely through voluntary retirement programs, according to reports.
The job reductions are on a faster schedule than Palo Alto, CA-based Hewlett-Packard had originally anticipated. The cuts are expected to generate $2.1 billion in severance and site-closing charges.
In addition to the $500 million savings the firm will realize this year, it will also save $2.5 billion in fiscal 2003 and $3 billion in fiscal 2004. It had originally forecast saving $2 billion and $2.5 billion during the two years.
Hewlett-Packard inked the $18.6 billion merger with Houston-based Compaq in early May. In 2001, the last year the companies operated independently, Hewlett-Packard generated $43.2 billion in revenue, while Compaq reported $33.6 billion.
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