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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: Elwood P. Dowd who wrote (93998)	12/7/2001 1:15:06 PM
From: Elwood P. Dowd	Respond to of 97611

Packard Foundation To Debate HP-Compaq Merger By Robyn Weisman, www.NewsFactor.com The David and Lucile Packard Foundation plans to meet Friday to debate whether to support the proposed merger between Hewlett-Packard (NYSE: HWP - news) and rival Compaq Computer (NYSE: CPQ - news). Already, two descendants of HP's founders, Walter Hewlett and David Packard, Jr., have come out against the merger. Together, they hold approximately seven percent of the company's shares. The Packard Foundation holds ten percent of HP's shares, and many experts believe that its decision will profoundly influence the proposed merger. Three daughters of HP co-founder David Packard sit on the foundation's 12-member board. "Clearly, if they vote against it, it won't go through," Giga Information Group analyst Rob Enderle told NewsFactor Network. "But the merger is not a done deal, necessarily, even if the Packard Foundation votes for it." Keeping It in the Family Although it may seem strange that the Hewlett and Packard families wield so much power over the destiny of a large, publicly traded entity, Enderle told NewsFactor that this situation is not unusual. "Very often, the founding families have a great deal of control," said Enderle. "After Bill Gates (news - web sites) leaves Microsoft (Nasdaq: MSFT - news), you would expect the Gates Foundation to have control over what the company does for a long period of time." End of the 'HP Way?' In his decision last month to oppose the merger, David Packard, Jr. cited his dismay over HP CEO Carly Fiorina's multiple layoffs over the last year and her plans to cut another 15,000 jobs once the merger goes through. Packard said that such massive cuts go against the so-called "HP Way," which, among other things, promotes job security to its employees. The HP Way evolved during the Great Depression, when the company was formed. Layoff Damage Giga analyst Enderle said the multiple layoffs threaten to cause a huge problem for HP, whether or not it merges with Compaq. "When you have a company like HP, which has a very established culture, and you blow up that culture, you do a lot of damage to a number of things," Enderle said. "One of them, of course, is productivity. Another is the value of the brand, and H-P [has] had a very valuable brand." Enderle noted that Giga recently conducted a study, which, while not scientific, did indicate that the HP brand may have declined over the last year. "The amount of trust companies put into HP has declined sharply, which would indicate that there would be other reasons for concern," Enderle said. Valid Concerns Enderle went on to say that the problem that the Packard Foundation is going to address is that a number of studies analyzing the merger proposal have provided just lukewarm support or have clearly come out against it. "Also if you look ahead and project the impact of the merger" on the combined company -- when the two companies will be going through the process of actually merging, which is expected to take about nine months -- "at least the projections that I'm seeing have Dell (Nasdaq: DELL - news) larger than the combined company as a result of market losses during the merger process," Enderle said. These projections "could be extremely problematic for the Packard Foundation and the HP executive team as people go through the analysis," Enderle said