HP-COMPAQ Analysts Say Pair Surely Are Large, But Not A Big Blue.(INTERNET & TECHNOLOGY)

Byline: Doug Tsuruoka

On paper, it seems like the fiercest threat to IBM Corp. in years. But at second glance, analysts say, the results might not be that dramatic.

Hewlett-Packard Co.'s plan to buy Compaq Computer Corp. would create a huge competitor in computer hardware and services. The merged company would overlap with Big Blue in every major product area except mainframes. (See related stories, bottom of this page and on A8.)

Together, HP and Compaq combined for revenue of about $87.4 billion in their last four quarters, only slightly less than IBM's $90 billion.

But some analysts weighing the impact on IBM say the deal's more of a paper tiger than a real one, at least at this stage.

The actual threat to IBM, they say, lies within the details of how HP and Compaq will merge and take on Big Blue. Those details might take a long time to unfold.

"This consolidation's going to be painful (for HP and Compaq)," said Tom Bittman, an analyst with market research firm Gartner Inc. "There's a tremendous amount of product overlap between the two. It'll take at least two years of work to combine their operations effectively.