Comment in today's WSJ by Holman W.
by: shbrom
Long-Term Sentiment: Buy 02/27/02 12:15 pm
Msg: 274579 of 274579
Jenkins, Jr. comparing dissident shareholder Hewlett to dissident shareholder Kerkorian (Chrysler).
J. suggests that Hewlett is a gadfly, rather than an effective dissident shareholder and has not proposed an effective alternative plan to bring HWP out of the doldrums. J. describes him as risk-averse, which is not shameful in and of itself. It's the fact that he got twisted up in the unoriginal view that big mergers don't work, a view that was laid out for him in the report by outside consultants. "Plan" is too good a term to use for Walter's "default option" of retreating to HWP's printing and imaging business. J. also makes the point that while the merger plan has no guarantee of success, a good management team implementing Walter's plan might not be successful either. What either route (merger or non-merger) requires is "energetic, opportunistic execution," which is of greater importance than the actual plan.
So, how does Walter's dissidency compare with Kerkorian's? Kerkorian made a buyout offer to take Chrysler under new management (Iacocca and Jerry York), and improve the ROR on his large (14%) Chrysler shareholding, free up some of the cash and get Chrysler moving forward again. Why won't Walter make the same proposal?
J. also makes the point that with the heirs' 18% of the votes committed to a "no CPQ merger" strategy AND the stock market's rejection of the deal (the severe price decline seen at the time the merger was announced), the results should have been preordained. In fact, HWP management, with Walter's silver medal caliber assistance (implies second place, doesn't it?), has made a real horserace out of the proposal to merge and the vote next month should be a real squeaker.
I recommend the original article (p. A21) which is much more complete and better written than this post.
CPQ Long |
