Packard foundation likes HP results, mulling merger
SAN FRANCISCO, Nov 19 (Reuters) - The Packard family foundation, whose support is a key to Hewlett-Packard Co's (NYSE:HWP - news) plan to buy Compaq Computer Corp.(NYSE:CPQ - news), is still mulling whether to vote for the deal even after HP posted ``very encouraging'' quarterly results, a foundation officer said on Monday.
HP's fourth quarter net profit dropped 89 percent, but operating results easily beat Wall Street forecasts thanks to higher-than-expected sales and deeper-than-expected cost cutting.
``I think the fourth quarter earnings were very encouraging. They were strong earnings, they beat estimates, and that is good,'' George Vera, chief financial officer of the David and Lucile Packard Foundation, said in a telephone interview.
The foundation, with a 10.4 percent stake in HP, is the company's single largest shareholder and is run by the three Packard sisters. Their brother, David, and Hewlett family members, who have all opposed the Compaq deal, hold under 10 percent taken together, according to analysts.
The Packard family members at the foundation have not taken a public stance on the deal.
HP management has argued that cost cutting would boost profits after the merger. The quarterly results were especially well received by analysts who had watched the company revise or miss forecasts for the four previous quarters.
Vera said the results reflected management's cost-cutting ability. ``Yes, I think it showed that they were able to do it in the fourth quarter,'' he said.
But he said the foundation had not settled on a preliminary decision on the merger. ``No, I would say we haven't. We are continuing to study everything,'' he said.
``There is a lot of material here to digest,'' he added. ``Our target is sort of sometime in December or early January.'' The next scheduled board meeting for the foundation is Dec. 7.
Financial analysts have said support by the Packard Foundation would keep the deal alive, while opposition would sharply cut management's chances of pushing through the acquisition in the current form. |
