NEW YORK (CNN) -- The world's second biggest computer maker, Hewlett-Packard and third-ranked Compaq Computer will merge in a $25 billion stock deal, the companies announced Monday.
HP and Compaq confirmed a "definitive merger agreement" which they said would create a new Hewlett-Packard with total revenue of $87.4 billion, and save $2.5 billion in costs a year.
The agreement comes at a time of depressed sales and earnings in the information technology industry, with many high-tech companies forced to slash their workforces as demand shrivels.
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