Hewlett-Packard 'buys Compaq Computer'

Hewlett-Packard is reported to be buying Compaq Computer for $25bn in stock.

Reports said that the £17bn deal is meant to bolster two companies that have been saddled with sagging profits and massive job cuts.

The deal would create a computer behemoth to rival IBM.

In its most recent 12 months, Hewlett-Packard reported revenues of $47bn (£32bn), while Compaq had revenues of $40bn (£28bn). IBM reported $90bn (£62bn).

The two companies have both seen their stocks suffer considerably in recent months.

Compaq's stock closed at $12.35 (£8.50) on the New York Stock Exchange on Friday, down from more than $30 (£20.60) a year ago. Hewlett-Packard's stock is worth $23.21 (£15.98), down 66 % from its high last summer.

When the announced job cuts of 8,500 at Compaq and 9,000 at Hewlett-Packard are completed, employment at the companies will be about 62,800 at Compaq and 87,000 at Hewlett-Packard.