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Fiorina: Compaq Merger Was Critical For HP

Integrating Hewlett-Packard Co. and Compaq Computer Corp. after a contentious merger last year required blending two dramatically different cultures, HP CEO Carly Fiorina said Friday.

Fiorina, who pushed through the largest merger in computer industry history despite strong opposition from some HP shareholders, said she has tried to retain attributes of both companies in the new, 140,000-employee computer maker.

Hewlett-Packard was reluctant to stray from the "HP way" that had made it an industry leader with products such as calculators and printers but also made it unwilling to embrace technological change, she said. Compaq was more nimble, but often made decisions too quickly without contemplating the effects.

"HP looked to the past for judgment, Compaq looked to the future," she said in a speech at the University of Maryland's Smith School of Business, her alma mater. "We are going to leverage process, intensity and thoroughness with speed and decisiveness."

As HP's chairwoman, Fiorina lobbied hard for the $19 billion merger that closed last year. She survived a bitter proxy fight with Walter Hewlett, son of HP co-founder William Hewlett. The younger Hewlett filed a lawsuit, alleging Fiorina and other HP executives acted improperly to sway the proxy vote outcome, but a Delaware judge rejected that argument.

Fiorina said Friday that although industry was skeptical the massive union would work, the merger was necessary to save HP from falling behind on technological development.

She cited the example of photo company Eastman Kodak, which Fiorina said was slow to recognize the growth of digital photography and the impact it would have on Kodak's traditional, chemical-based film. Kodak had to deeply cut its dividend in September to pay for greater investment in digital technology.

Palo Alto, Calif.-based HP has to keep up with customer demand for digital, portable and wireless technology in its computer and printer business to survive, she said.

In August, HP unveiled more than 100 new products, including digital cameras and lightweight printers. HP also debuted multimillion dollar servers this May to challenge IBM.

"We did it (the merger) because we knew technology was changing and how customers used technology was changing. So we knew we had to change," she said.

HP's most recent quarterly earnings and sales disappointed Wall Street. Profits for the three months ended July 31, totaled $297 million. Revenue grew 5 percent to $17.35 billion.

Copyright © 2002 The Associated Press. All rights reserved. The information contained in the AP News report may not be published, broadcast, rewritten or redistributed without the prior written authority of The Associated Press.

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