Compaq to hit targets amidst merger set-back

Compaq is claiming that its first quarter financial results show customers are not abandoning it in light of the on-going HP merger plans.

The results, which will be released next week, are expected to reach or beat expectations set by analysts. The company is predicting sales of $7.7bn compared with analyst estimates of around $7.6bn.

The company is claiming that sales of data storage devices will come in about a third higher than it was predicting at the tail end of last year. In the last six months, this division of the company hit forecasts leading executives to claim customers have stuck by it during the difficult times for the deal with HP.

But there still remains an element of uncertainty for the merger as the legal battle between Walter Hewlett and HP rolls on.

After a delay in making a decision, a US judge yesterday ruled Walter Hewlett could go ahead with a lawsuit to attempt to halt the deal. It is based on Hewlett's claim that HP bought the votes of major shareholders by inking business deals while misleading investors about proposed integration plans.

Time will be a critical factor for the merger in the light of Walter Hewlett's victory yesterday. It is likely that integration plans will be more difficult to manage as the judge puts the integration on ice until the lawsuit is resolved.