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

To: PerryA who wrote (94182)	12/12/2001 6:44:12 AM
From: hlpinout	Read Replies (1) \| Respond to of 97611

December 12, 2001 03:41 Hewlett-Packard, Compaq Executives Offer Assurances on Merger By Therese Poletti, San Jose Mercury News, Calif. Dec. 12--The chief executives of both Hewlett-Packard and Compaq Computer tried to rally their respective troops recently with e-mails to employees, according to filings made Tuesday with the Securities and Exchange Commission. Both told their employees they had no intention of giving up on their controversial merger, even as the deal is declared dead by some on Wall Street. On Friday, the David and Lucile Packard Foundation, HP's largest shareholder with 10.4 percent of the stock, said that it was opposed to merging with Compaq. In doing so, the Foundation lined up behind heirs of HP founders Bill Hewlett and Dave Packard who have voiced their opposition to the merger. Many analysts and investors believe that other large institutions may follow the foundation's lead and vote against the deal if the companies press ahead with a shareholder vote. In her e-mail to staffers, HP CEO Carly Fiorina acknowledged HP's disappointment with the foundation's decision, and said that the recent events may have been "unsettling and distracting." But she urged employees to deliver consistent results and stay positive about the merger. She also pointed out that the family foundations had different requirements than a "high tech company competing in a rapidly changing market." Fiorina said the deal with Compaq is a bold action to "protect and secure this company's future. In our thinking, the best way to do this is to build healthy, sustainable businesses that lead the changes in our industry -- rather than sitting back and allowing ourselves to be shaped by these changes." With each twist and turn in the deal, any communication or comment by the parties involved is now being subjected to intense scrutiny and analysis. The most recent e-mail by Compaq CEO Michael Capellas also reiterated his company's commitment to the merger, and yet it was interpreted by some on Wall Street as in indication that the company is beginning to ponder a future that may not involve HP. Capellas wrote: "Regardless of the circumstances -- whether we are part of the new HP or a stand-alone company -- I am confident in our ability to achieve these objectives." He also noted that Compaq entered into the deal with HP with three goals -- to expand its enterprise business, achieve critical mass in computer services and improve the economics of its PC business. "This is also the direction we set in June, when I outlined our new strategy and established an aggressive 180-day execution plan," Capellas wrote. "That strategy has not changed." A spokesman for Houston-based Compaq did not return calls seeking comment. But Capellas, speaking at Internet World in New York, further explained his stance, saying that having a back-up plan in case its merger with Hewlett-Packard doesn't occur is "common sense." "Obviously you would expect us to have a business plan that is ongoing and that is quite frankly what I would call normal responsibility," Capellas said, adding that he absolutely supports the merger. Compaq board member and venture capitalist Thomas Perkins said Compaq is holding a regularly-scheduled board meeting later this week, but he declined to be more specific about what might be discussed. "The plan is to make this thing happen," he said. "Neither party can unilaterally withdraw from the deal. Compaq cannot say, `We are out of here,' nor can they. If for some reason, it is decided not to pursue this, it would have to be an agreement between the two boards of directors." HP shares fell $1.01, or 4 percent, to $21.99 and Compaq slipped 21 cents, or 2 percent, to $9.49. -----