<when the judge will rule >
Walter is not going to call duechebank witnesses according to this article in the WSJ. If they rest the case now, two things will become eminently apparent.
One: Lawyer's speculations and speeches are not evidence, and the court will grant HP's motion for non-suit; and, Two: the case will be over tomorrow.
Delaware Court Sizzles as Lawyers
For H-P, Hewlett Debate Intentions
By PUI-WING TAM and SCOTT THURM
Staff Reporters of THE WALL STREET JOURNAL
WILMINGTON, Del. -- Lawyers for an opponent of Hewlett-Packard Co.'s plan to buy Compaq Computer Corp. continued to paint top H-P executives as having hidden important documents and having misled shareholders before a crucial shareholder vote on the $19.6 billion deal, leading to some acrimonious courtroom exchanges.
...
H-P's lawyers, meanwhile, grilled Walter Hewlett, a dissident H-P director and co-founder's son, on his motivations behind filing a lawsuit against H-P and implied that Mr. Hewlett had shirked his duties as a director by not disclosing to the board his concerns about H-P's efforts to integrate with Compaq.
The second day of a three-day trial in Delaware Chancery Court over Mr. Hewlett's lawsuit resembled the bitter six-month proxy campaign itself, with each side challenging the other's information and motives.
Mr. Hewlett's lawyer, Steve Neal, didn't present any new evidence. But Mr. Neal continued to question H-P Chief Executive Carly Fiorina and Chief Financial Officer Bob Wayman over documents suggesting that H-P officials had internally lowered their estimates of the merger's benefits.
The battery of questions led to some sharp exchanges, particularly between Mr. Neal and Ms. Fiorina, who spent two hours on the stand Wednesday. When Mr. Neal homed in on documents showing that some H-P business units might fall short of financial goals by as much as 25%, Ms. Fiorina said, "You're accusing a CEO of a publicly traded company of lying." Mr. Neal replied, "I'm only asking you questions right now."
The testimony is part of the end game for Mr. Hewlett, who waged a proxy battle against the deal but who appears to have fallen short in the March 19 shareholder vote. Mr. Hewlett filed suit on March 28 alleging H-P had improperly coerced Deutsche Bank AG's Deutsche Asset Management, a large shareholder, into switching its votes of 17 million shares in favor of the deal. Mr. Hewlett also contends that H-P had misled shareholders over the progress of its integration with Compaq.
Most legal experts said the progress of the trial so far tended to favor H-P. Mr. Neal's emphasis on the allegedly misleading forecasts suggests that he doesn't have a "smoking gun," tying Deutsche's switched votes to a promise or threat from H-P, they said. For example, Mr. Neal doesn't intend to call any Deutsche executives as witnesses. "We have seen a switch in their strategy," said John Coffee, a law professor at Columbia University who has consulted for H-P.
But Charles Elson, director of the Center for Corporate Governance at the University of Delaware, said it is risky to divine the outcome of a trial in progress. Mr. Elson said Mr. Hewlett had offered several "interesting and relevant" pieces of new information at the trial, including the pessimistic internal forecasts and H-P's hiring of Deutsche Bank to help in the proxy battle.
Compaq shares were up 16 cents at $10.36 Wednesday, while H-P shares were off 83 cents at $17.21, in 4 p.m. composite trading on the New York Stock Exchange. The "spread" between the value of Compaq shares and their value if the deal is completed is now less than 5%, the lowest level since the deal was announced last September.
In her testimony, Ms. Fiorina repeatedly denied that the documents Mr. Neal had presented should have been disclosed, saying they were planning documents rather than forecasting documents.
Mr. Wayman, for his part, acknowledged that the documents showed that some H-P units were lowering their sights for postmerger financial goals, but also argued that these were purely planning documents.
Regarding the alleged coercion of Deutsche Bank, Mr. Wayman acknowledged that he had hired the bank in February to assist with the proxy battle for a $1 million fee and an additional $1 million if the deal with Compaq was completed. Mr. Wayman said he thought that Deutsche supported the Compaq transaction when he hired the bank.
However, Deutsche Asset Management initially voted against the deal. When Mr. Wayman learned of the opposition, he requested a last-minute conference call with Deutsche Asset Management.
Mr. Wayman said he didn't hire Deutsche to win the bank's support, and denied using corporate assets to influence Deutsche. "At no time did I imagine the [commercial] relationship would have anything to do with" the votes, he said.
A lawyer for H-P, Robert Payson, revealed midway through the day that a Deutsche official had made tapes of the March 19 conference calls with Mr. Hewlett and with Ms. Fiorina and Mr. Wayman. The tapes have been submitted into evidence. The tapes' contents are unknown.
A person close to the situation added that Deutsche switched only 10.5 million of its H-P shares to favoring the merger. The other 6.5 million shares hadn't yet been voted by Deutsche, this person said, and were subsequently voted for the merger after the conference calls.
Late in the day, H-P lawyer Steve Schatz repeatedly questioned Mr. Hewlett on why he hadn't disclosed his concerns about H-P's integration efforts to the H-P board. Mr. Hewlett replied that the "communication between me and the board had broken down. We were in a proxy fight, and [I didn't know] whether they would treat it seriously or as some publicity stunt."
The trial was set to resume Thursday morning. |
