H-P to reduce Compaq to a ‘sub-brand’

Hewlett-Packard (H-P) chairwoman and chief executive Carly Fiorina has said that the Compaq brand will continue to exist, but only as a sub-brand, after the &£17bn computer and software merger which saw H-P come out on top.

Speaking at a press conference in New York yesterday (Tuesday) she added that the merger was unlikely to mean any significant reduction in the marketing budget. Fiorina said H-P would be the “surviving brand” but Compaq would be used “intelligently” as a sub-brand.

Although there was no mention of advertising agencies at the press conference, it is likely that advertising and media arrangements will be reviewed once the merger is complete.

In the UK H-P uses Publicis and Optimedia. Banks Hoggins O’Shea/ FCB holds the majority of the Compaq UK creative account. Compaq’s &£100m European media account moved from OMD to Initiative Media two months ago (MW July 12).

The merger will create a company to rival industry leader IBM. The new company will have 145,000 employees in 160 countries and forecast annual profits of &£2.75bn. H-P shareholders will emerge with 64 per cent of the combined group and Fiorina will retain her posts in the merged company. Compaq chief executive Michael Capellas will be president.

“One of the synergies created by the merger was to spend less on marketing. We decided against that. I think we will be spending as much on marketing as the two companies spend today,” says Fiorina.

She says it will be several months before the structure of the company is announced, and will not comment further on how the brands would be run or the marketing budget split.

The merger still has to receive regulatory approval and until that time Fiorina says H-P and Compaq will “compete as individual companies”.