HP Workers Divided on Merger
Benjamin Pimentel, Pia Sarkar And Carrie Kirby
c.2001 San Francisco Chronicle
12/16/2001
Amid the growing opposition to Hewlett-Packard Co.'s merger with Compaq Computer Corp., HP Chairman Carly Fiorina found some much-needed support among her employees during a tour of the Pacific Northwest last week.
At an HP facility in Vancouver, Wash., a worker gave Fiorina a wooden replica of the Palo Alto garage where the company was founded 62 years ago. Another employee vowed to cast his 6,000 HP shares in favor of the company's bid to buy the Houston computer-maker.
``People were very excited,'' said Yvonne Hunt, an HP director for employee relations who recounted Fiorina's trip. ``People feel very positive about her. She is seen as a very courageous leader.''
But elsewhere within HP's far- flung system, other employees have a less-than-enthusiastic view of the merger and the 47-year-old executive who has bet her career on the deal.
``Nobody really cares for Carly,'' said a woman who works at the HP office in Atlanta. ``She's just a lot of show,'' said the employee, who asked not to be named. ``It's just a bunch of grandiose stuff. If this (merger) falls through it's a lot of egg on her face.''
Ever since it was unveiled on Labor Day, the $22 billion proposed alliance between HP and Compaq has been debated on Wall Street, discussed in boardrooms and dissected by the media. But it's HP's 88,000 employees, as well as their 65,000 counterparts at Compaq, who have the most at stake.
Many employees are worried about job security; the proposed deal envisions 15,000 job cuts. Workers also are concerned about the widening rift between HP's top executives and the families of the company's revered founders, William Hewlett and David Packard, who oppose the deal. Some employees also say HP's top executives are turning their back on the company's core values.
``We're frightened for our jobs,'' the HP employee in Atlanta said.
On Dec. 7, the David and Lucile Packard Foundation, HP's largest shareholder with 10.4 percent of the company's stock, said it will oppose the merger. Last month, HP director Walter B. Hewlett and David Woodley Packard - sons of the company's co-founders - also came out against it.
Last week, Hewlett wrote the directors of HP and Compaq, urging them to scrap the merger plan that he believes is hurting both companies. HP rejected his plea and accused Hewlett of causing more ``uncertainty and concern'' through his opposition.
HP director Richard Hackborn, who supports the deal and was an early champion of Fiorina, became so upset with Hewlett that he resigned from the board of the William and Flora Hewlett Foundation, which Hewlett chairs. That foundation also opposes the deal.
Although the Packard and Hewlett families, and the foundations they control, hold only about 18 percent of HP's stock, experts say their votes could sway other shareholders to turn down the deal. A shareholders' vote hasn't been scheduled but is planned for early 2002.
To salvage the merger - and possibly her job - Fiorina and her team may need to fight for every possible vote not just of other big institutional investors, but also individual shareholders, including former and current employees.
It may not be a slam dunk.
``Some are supportive of the direction of the company and buy into the theory that if you don't do it (a merger) now you have to do it later,'' said Roy Verley, a former HP executive who left the company last year after more than 20 years. ``There are others who still aren't convinced.''
HP spokeswoman Rebeca (CQ) Robboy said most HP employees support the deal and Fiorina's vision for a bigger and stronger HP. Robboy said that view is supported by independent employee surveys and e-mails Fiorina has received from the rank and file.
Kathy Frederickson, an HP sales representative in Minneapolis, called herself ``100 percent pro-merger.'' She scoffed at analysts who say the controversy is causing distractions that HP's competitors could exploit.
``I would love it if my competitors think I was distracted,'' Frederickson said, ``because they would underestimate me and I would take advantage of any openings somebody gives me. The reality is we know what we're doing.''
Joe Podolsky, who edits an HP publication geared toward customers, said he believes in what Fiorina is trying to do.
``I like Carly a lot,'' Podolsky said. ``I think she's a visionary. I think she's very, very smart, very, very energetic. She has guts. It takes an enormous amount of courage to stand up to those withering assaults she's been forced to face in the last few months.''
Other employees were less upbeat about Fiorina and HP's future.
More than a dozen of them were asked their views of the merger as they were leaving HP's Palo Alto campus last week. Most declined to comment, adding that the company has instructed them not to speak to the media.
Most of them were worried about one thing: losing their jobs.
About 15,000 HP and Compaq jobs would be cut if the merger goes through. That could make it tougher for Fiorina to make her pitch because she's essentially trying to get people to support a deal that could eventually cost many of them their jobs.
``For me personally, as long as I have a job, that's all I care about,'' said an employee who works in information technology in Palo Alto. ``I think either way, the company's in store for turmoil whether it goes through or not.''
Some said they were traumatized by the 6,000 layoffs announced last summer. The employee who works in information technology said those cuts resulted in more work for those left behind.
``Just about everybody's had to take on a greater workload,'' he said.
Even Podolsky, a Fiorina supporter, said he was affected by the firings.
``I have to say the layoffs in August were not very pleasant. I knew some people close to me who were gone - and gone very quickly. The speed at which that was executed was very uncomfortable. I understand why it was necessary - but it was still uncomfortable.''
The company is in disarray, said Michal (@CQ@)@@ @Simek, who was among those axed in August.
He has stayed in touch with his former HP colleagues, and contrary to what other HP workers say, said there's growing resentment against Fiorina. Simek said many HP employees hope she will be out of a job soon.
``The sentiment is that the best thing that can come out of this is that she can get canned,'' said Simek, who now works for a Palo Alto technology firm. ``That's the only upside anybody is able to figure out from this.''
Such views were seldom heard about a company where employees and managers were known for mutual respect and trust, said Milton Moskowitz, a writer who for 20 years has compiled ``The 100 Best Companies to Work For in America,'' now published in Forbes magazine.
HP has always had ``this wonderful culture'' known to many as the HP Way. ``They never fired you, employees had great respect, great trust in management,'' he said.
Fiorina and her supporters say she is keeping those traditions alive, even as she moves the company forward with the Compaq merger plan.
She visited the Pacific Northwest, director Hunt said, to uphold the old HP tradition of ``management by walking around'' initiated by Hewlett and Packard. The co-founders often mingled with workers on the production line or at employees' cubicles.
But despite her efforts to emulate Bill and Dave - as the co- founders are still fondly called by current and former employees - Fiorina will probably have a tough time wrestling with their legacy, some experts said.
``HP is a very difficult company to be CEO of,'' Adventis analyst Ford Cavallari said. ``Because no matter what your name, there are two guys, Hewlett and Packard, whose names are bigger.''
``We're behind the families,'' said the Atlanta HP employee, who said that of all arguments made for or against the merger, the most compelling came from Packard.
In opposing the sale, Packard lamented the loss of 15,000 jobs. His father and William Hewlett, he said, ``never developed a premeditated business strategy that treats HP employees as expendable.''
Verley, the 20-year HP veteran, said ``those words did resonate with employees and ex-employees who I think cheered those words because they lived by them.''
As they ponder where they stand on the HP-Compaq merger, many HP employees will be ``influenced by the names `Hewlett' and `Packard,' '' Verley said.
``Those names are magical within HP.''
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