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HP-Compaq integration team at 1,200

The two expand their merger integration team to more than 1,200 employees as the combined company gears up to unveil the "new HP" in the next few weeks.

Hewlett-Packard and Compaq Computer have expanded their merger integration team to more than 1,200 employees as the combined company gears up to unveil the "new HP" in the next few weeks.

The figure was given in a March 26 note from Webb McKinney, president of the Business Customer Organization at HP and one of the co-chairs of the integration team, to HP and Compaq employees. Until recently, the team included 900 employees and before that there were even fewer. The integration team is charged with merging the product lines and divisions of the two companies into a cohesive whole. It works in a "clean room" environment isolated from the rest of the company.

"We have nearly completed the four-phase integration planning process," McKinney wrote. "One of our key goals from the start of this process was to make sure the new company would be prepared to open its doors and hit the ground running in the April to May time frame. We are on target to reach this goal."

Now that it appears stockholders have approved the transaction, all eyes are focused on how well the company can integrate two large, diverse and historically antagonistic companies.

But HP and Compaq have been intensely focused on the integration process ever since the merger was announced. Compaq prolonged the integration of Digital after it acquired that company in 1998, according to several Compaq executives. Compaq's failure in absorbing Digital effectively led to the acquisition of Compaq by HP.

So far, executives at both companies have said that most of the work is complete. The integration team has already determined the management structure and decided which product lines to keep.

Most likely, the new HP will keep Compaq's PC, notebook and Intel-server line, sources say, and let its own machines fade away. Retaining Compaq's products, however, could be a painful decision for HP, as it would mean that many of the managers and engineers from Compaq's PC departments would remain, while their counterparts from HP would have to get new jobs.

Solid information, however, has been difficult to come by. Some of the clean room operations are taking place in Arizona, according to sources. The integration plan will be released once the merger is legally certified.

HP CEO Carly Fiorina and Compaq CEO Michael Capellas have been getting weekly briefings on the integration process since the beginning, according to the companies.