With 2B shares out (if that's the correct number), HP has spent $.05 per share so far on the ad campaign.
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=DJ H-P Ads Against Walter Hewlett May Boost His Credibility
By Donna Fuscaldo Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)The proxy battle over the proposed merger of HewlettPackard Co. (HWP) and Compaq Computer Corp. (CPQ) has gotten nastier in recent days.
While both HP, and Walter Hewlett, son of one of the late cofounders who is opposed to the combination, had been taking jabs at each other's stance on the deal, it's becoming increasingly personal.
The latest attack comes from HP, Palo Alto, Calif., which ran an advertisement in national newspapers including the New York Times, The Wall Street Journal, and The San Jose Mercury News, Monday, describing Hewlett, the sole HP board member to oppose the combination, as flipflopping on issues including the merger.
For instance HP's twopage advertisement states that on Sept. 3, Hewlett approved the merger but then publicly declared his opposition on Nov. 6. In another example, HP said that on Nov. 6, Hewlett hired an investment firm to independently evaluate the merger and then on Feb. 4 admitted he had promised his advisers a $12 million fee if the merger is defeated.
This comes only a few days after HP issued a letter to shareholders in which the company called Hewlett's ideas about the future of the company "quickcooked" and said he " offers nothing meaningful."
While the Hewlett camp is no angel when it comes to bashing HP and Chief Executive Carly Fiorina, it does have less to lose than a company, which must protect its corporate image, say marketing professionals. Plus, these experts say HP actions could actually backfire and help Hewlett's cause.
Investors may see him more sympathetically and look at him as somebody who is being forced into a corner, says Rajeev Kohli, a professor of marketing at Columbia Business School in New York City. "It gives him credibility," he adds.
"If you lift something up by putting something down it will ultimately reflect on you," notes Robbie Vorhaus, chief executive of Vorhaus & Co., a New York Citybased public relations firm. "It's a tactic that in some forms of warfare work, but there's always a casualty and often it's you."
In Vorhaus' view, HP's actions are a form of "desperation." Instead of highlighting the benefits of the merger, HP is giving credibility to Hewlett, he says.
Despite the ads, a HP spokeswoman says the company is not bringing the proxy fight to a personal level.
"This is not about Walter, it's about his campaign to mislead shareowners," says a spokeswoman for HP.
The spokeswoman pointed to recent presentations and press interviews in which CEO Fiorina described Hewlett as a "good and decent man" who has a right to disagree as evidence that HP isn't attacking him personally.
She notes that advertisements are an essential element and important tactic for reaching out to retail investors during a proxy battle. "It would be much more damaging to the brand and company if we didn't win the vote," says the spokeswoman.
Nevertheless, the Hewlett camp sees the ads as personal attacks. And just like some marketing professionals, they think it will help their cause.
"It's a clear indication of one thing, that Mr. Hewlett already won on the substance of the debate," says Todd Glass, a spokesman for Hewlett. "We estimate that HP has spent between $100 million and $125 million of stockholder money on its campaign so far."
The proposed merger, which was announced last September, won't come to a shareholder vote until March 19. And while it's unclear which side will win, one thing is likely, the attacks from both side won't abate until then.
Donna Fuscaldo, Dow Jones Newswires, 2019385253
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