By Tom Becker Of Dow Jones Newswires
WILMINGTON, Del. (Dow Jones)--Compaq Computer Corp.'s (CPQ) chief financial officer said Thursday that financial targets set by Compaq and Hewlett-Packard Co. (HWP) management in relation to the entities' proposed $19 billion merger are realistic and can be surpassed.
Jeffrey Clarke, Compaq's CFO, made the statements as part of his testimony in the third day of the trial to consider dissident shareholder Walter Hewlett's lawsuit against the company his father founded. In his lawsuit, Hewlett asserts the financial condition of the proposed combined entity is deteriorating and the targets won't be reached.
"The cost synergy and (earnings per share) targets are realistic and I believe we should still continue to plan to those levels," he said in his direct testimony Thursday. "I expect there to be some ups and downs along the way but the targets are certainly realistic."
Clarke also testified that messages he penned to Compaq and H-P executives which called the merger situation "ugly" and "deteriorating" are being taken out of context by Hewlett's camp.
The senior financial member of the merger integration team said he was commenting on the state of various business units and their response to the merger planning process in the messages rather than the financial targets.
In the messages "I'm talking to the troops and the team and saying we need to increase the pace of our decision making and we need to close the gaps" between current performance and the targets, he said. "I was frustrated that the targets we had set were not being accepted by the business groups."
Since the trial began Tuesday, Stephen C. Neal, Hewlett's attorney, has repeatedly questioned H-P and Compaq executives on revenue loss and cost synergy targets the company used in its internal reports. Hewlett's side contends the entities' performance in relation to the targets is spiraling downward.
H-P and Compaq, specifically Carly Fiorina, H-P's chief executive, and Robert Wayman, the company's chief financial officer, said the most recent figures are an assessment of where certain business units are in the planning process and not a financial forecast.
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