Walter is cranking it up again.
Walter Hewlett Comments From the Road; Urges HP Stockholders to Focus on the
Real Issue - Stockholder Value
PALO ALTO, Calif., March 4 /PRNewswire/ -- Walter B. Hewlett, on behalf of
The William R. Hewlett Revocable Trust and its trustees, today filed the
following open letter to stockholders of Hewlett-Packard Company:
Dear Fellow Hewlett-Packard Stockholder:
As you probably know, we continue to be on the road meeting with
investors. We are very encouraged by what we hear. Investors understand
and have been extremely receptive to why this transaction is not in the
best interests of HP stockholders and should be defeated.
We thank the growing number of investors that are coming out against the
merger publicly. We also thank all those who have privately told us they
plan to vote against the merger. Since we first announced our opposition
to this merger in November, we have continued to see widespread
opposition. Every week, more and more investors publicly come out
against the merger.
My interest in this matter is as a stockholder like you -- concerned only
with doing what is best for our mutual investments in HP. The value of
your HP shares is at stake, and to me, that is the overwhelming priority.
Is this transaction in the best interests of HP stockholders? Is it
worth paying $25 billion to double down on commodity computing? Do HP
stockholders want to trade away their interest in the crown jewel Imaging
& Printing business? Our view, and the views of more and more
stockholders every day, is a resounding NO. HP employees also appear to
agree; according to two surveys of HP employees commissioned by David W.
Packard and conducted by the Field Research Corporation, a nationally
recognized polling firm, 63% of HP employees surveyed oppose the
merger.(1)(2)
If HP and Compaq merge, products and product lines will be discontinued,
which we believe will give rise to unhappy customers and lost sales while
HP and Compaq attempt to integrate two large technology companies with
over 145,000 employees in 160 countries. We believe the combined company
would struggle with this integration and product rationalization process
for years, while focused competitors take customers and market share.
How will HP's special talent for innovation survive in this chaos?
Another issue is HP management's underlying notion that the way to
succeed is to be all things to all people. Clearly that is not
historically how technology companies have become successful. In our
opinion, becoming the #1 player in low-end commodity computing does not
produce significant profit or build stockholder value. Of equal
importance, there is no good reason to pay $25 billion for all this -- an
unprecedented 47 times Compaq's CY 2002 estimated earnings.(3)
In contrast, our "Focus and Execute" strategy is designed to enhance
value for all HP stockholders. We believe that it has the potential to
generate $14 to $17 greater value per share.(4) This strategy does so
using even more conservative overall revenue and margin assumptions than
HP management uses to estimate the HP/Compaq merger's impact for 2003.
The three guiding principles of this strategy are:
* Re-allocate investment in Imaging & Printing to defend HP's position
and capitalize on emerging growth opportunities
* Build mid- and high-end enterprise position by filling key gaps
* Focus on profitability, not scale, in PCs
Because a "Focus and Execute" strategy yields a more attractive business
mix with less risk, we believe that HP would have more predictable
earnings, less volatility and a higher return on equity than HP/Compaq
combined. Therefore, we believe that following this strategy, HP would
command a significantly more attractive earnings multiple, more in line
with HP's multiple prior to the announcement of the proposed merger. On
the other hand, we believe the proposed merger will destroy significant
stockholder value.(4)
HP investors have raised the issue of leadership of HP after the vote on
March 19. We intend to take up issues of succession with the outside
directors of HP's Board once the merger is defeated. We have every
confidence that the Board will respect the voice of the stockholders and
will handle any transition effectively, professionally and smoothly, as
other companies have done in similar situations.
HP is a strong company with excellent employees and extraordinary
potential. HP has a deep bench of experienced operating executives who
continue to manage the business well.
We are confident that you will not be misled by any attempts to distract
you from what really matters -- stockholder value. We urge you not to
allow HP to make a $25 billion mistake by acquiring Compaq. It is wrong
for HP. It is wrong for stockholder value. It is wrong for you.
We urge you to vote against the proposed merger by signing, dating and
mailing your GREEN proxy card today.
Thank you for your continued support and encouragement.
Sincerely,
/s/ Walter B. Hewlett
Walter B. Hewlett
(1) The surveys were commissioned and paid for by David W. Packard,
acting as an individual. Mr. Packard is not a participant in the
solicitation of proxies from Hewlett-Packard stockholders being
conducted by Walter B. Hewlett, Edwin E. van Bronkhorst and The
William R. Hewlett Revocable Trust.
(2) Field Research Corporation: "Poll of HP's Corvallis Employees Finds
Strong Opposition to the Company's Proposed Merger With Compaq"
2/20/02; "HP's Boise Employees as Strongly Opposed to the Company's
Proposed Merger with Compaq as Its Corvallis Employees" 2/25/02.
Corvallis survey results are based on a random sample of 445 current
and 226 former HP employees living in Benton County or Linn County,
Oregon by Field Research Corporation. The Boise-area findings are
based on a random sample of 235 current and 237 former employees of
the Hewlett-Packard Company living in Ada County, Idaho by Field
Research Corporation.
(3) Based on HP's closing share price of $20.36 on February 15, 2002,
and the announced exchange ratio of 0.6325 and Compaq's First Call
consensus EPS estimate of $0.27 for calendar year 2002.
(4) Based on assumptions outlined in a report titled "HP Has Higher
Value, Lower Risk Strategic Alternatives to the Proposed Merger"
filed with the SEC on 2/19/02.
For additional information, visit our website at www.votenohpcompaq.com.
MacKenzie Partners, Inc. at
105 Madison Avenue
New York, New York 10016
proxy@mackenziepartners.com
(800) 322-2885 (toll-free)
(212) 929-5500 (call collect)
or visit
www.VoteNoHpCompaq.com
ATTENTION HP EMPLOYEES
It is important for all employees of HP to know that their vote is
confidential for all shares owned in the HP 401(k) plan. Strict
confidentiality is assured under the terms of the 401(k) plan and applicable
federal law. Therefore employees should feel free to vote their 401(k) shares
in their best interest without fear of intimidation or reprisal.
Forward-Looking Statements
The views expressed in this letter contain judgments, which are subjective
in nature and in certain cases forward-looking in nature. This letter also
contains estimates made without the benefit of actual measurement.
Forward-looking statements and estimates by their nature, involve risks,
uncertainties and assumptions. Forward-looking statements and estimates are
inherently speculative in nature and are not guarantees of actual measurements
or of future developments. Actual measurements and future developments may
and should be expected to differ materially from those expressed or implied by
estimates and forward-looking statements. The information contained in this
letter does not purport to be an appraisal of any business or business unit or
to necessarily reflect the prices at which any business or business unit or
any securities actually may be bought or sold.
ADDITIONAL IMPORTANT INFORMATION
On February 5, 2002, Walter B. Hewlett, Edwin E. van Bronkhorst and the
William R. Hewlett Revocable Trust (collectively, the "Filing Persons") filed
a definitive proxy statement with the Securities and Exchange Commission
relating to the proposed merger involving Hewlett-Packard Company and Compaq
Computer Corporation. The Filing Persons urge stockholders to read their
definitive proxy statement because it contains important information. You may
obtain a free copy of the Filing persons' definitive proxy statement and any
other soliciting materials relating to the Filing Persons' solicitation on the
Securities and Exchange Commission's website at www.sec.gov, on the Filing
Persons' website at www.votenohpcompaq.com, or by contacting MacKenzie
Partners, Inc. at 1-800-322-2885 or 1-212-929-5500, or by sending an email to
proxy@mackenziepartners.com.
SOURCE Walter B. Hewlett
-0- 03/04/2002
/CONTACT: Joele Frank or Todd Glass of Joele Frank, Wilkinson Brimmer
Katcher, +1-212-355-4449, for Walter B. Hewlett/
/Web site: votenohpcompaq.com /
(HWP CPQ)
CO: Walter B. Hewlett; William R. Hewlett Revocable Trust; Hewlett-Packard
Company; Compaq Computer Corporation
ST: California
IN: CPR HRD PEL
SU: TNM
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