Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: hlpinout who wrote (94294)	12/17/2001 5:55:36 PM
From: hlpinout	Read Replies (1) \| Respond to of 97611

Company Digest Printer version December 16, 2001 14:16 Hewlett-Packard, Compaq Vigorously Push Merger By Therese Poletti, San Jose Mercury News, Calif. Dec. 15--Hewlett-Packard and Compaq are getting more aggressive in their battle to convince shareholders of the merits of their proposed merger. At its board meeting in Houston on Thursday, Compaq's board of directors agreed it is going to help HP pitch the deal to Wall Street and other investors. Those investors are essential to approval of the deal now that some Hewlett and Packard heirs have opposed it. "A good deal of time was spent on talking about how Compaq and its directors and management could help HP more than just cheering from the sidelines," said Silicon Valley venture capitalist Thomas Perkins, who is a member of Compaq's board. "We think that we can help. We can and we will make joint presentations with HP. . . . I expect to do it myself." Perkins said the Compaq and HP boards have created a joint sub-committee whose sole goal is to win approval of the merger. He said the companies have more ideas on things that they will be doing together, but said he could not disclose them. The committee will hold weekly meetings, either on the phone or in person. "We want this to happen," he said. Last Friday, HP's proposed marriage with Compaq received a serious blow when the Packard Foundation, one of the largest charitable organizations in the United States, decided to vote its 10.4 percent stake in HP against the deal. The Packard Foundation joined other Hewlett and Packard children, including dissident HP board member Walter Hewlett, in opposing the deal. So far, investors with about 18 percent of HP's stock have come out officially against the deal. HP also is getting more combative in its stance against those heirs of legendary founders Bill Hewlett and Dave Packard. On Thursday, when Hewlett's oldest son Walter wrote a letter to the HP and Compaq boards, asking for a "speedy, mutual unwinding" of the deal, HP and Compaq responded that its board and its executives took "major exception" to the letter. After Hewlett's letter, HP board member Richard Hackborn, and a former HP executive for 33 years, resigned from the Hewlett Foundation, a post he had held for six years, citing a conflict of interest. Sources close to the HP board also said that Hackborn's move was a not-so-subtle hint directed at Walter Hewlett to leave the HP board. Hewlett and other directors will come up for re-election in a few months. Separately, HP board member Bob Knowling wrote a letter to HP and Compaq employees, which was posted on HP's Web site and filed with the Securities and Exchange Commission on Friday. In his letter, written while on a trip to New York where he was attending a board meeting for another company, he likened how HP employees are dealing with the scrutiny to how New Yorkers handled the horrific effects of the terrorist attacks on Sept. 11. "Our situation at HP doesn't even register on the radar screen compared to what's going on here in New York," Knowling wrote. "But, on a different level and scale, I do see a parallel in the notion that while the media continues to focus on this HP-Compaq deal, the employees of both of these great companies have the challenge of continuing to focus on and serve the customer in spite of all the noise and distraction." Knowling also said that he continues to believe and trust HP Chief Executive Carly Fiorina, who he said he has known for years. "Through it all, I've not once seen her whine about how she is being treated and she's never shown me anything but grit and determination to win," he said. "She is her own worst critic and she doesn't duck the hard issues or questions." -----

To: hlpinout who wrote (94294)	12/17/2001 6:09:23 PM
From: hlpinout	Respond to of 97611

From Information Week. -- Murky Merger Puts Some Customers In Holding Pattern Dec. 17, 2001 Amid uncertainty, Compaq says it has a future with or without Hewlett-Packard By Paul McDougall David Lauderdale has watched demands on his company's Web infrastructure expand tenfold in the past year as Worldspan L.P., a provider of electronic travel services, continues to grab a bigger chunk of the online reservations market. To ensure that Worldspan--jointly operated by several major airlines--can handle the growth, Lauderdale, the company's VP of worldwide technical operations, inked a three-year deal in October with Compaq under which the computer maker will provide ProLiant Windows servers and rapid deployment services. Lauderdale says he figured that Compaq, along with would-be partner Hewlett-Packard, would be able to deliver innovative, best-of-breed tools. Now, he doesn't know what to think. The merger's on shaky ground, and if it fails, some observers say HP's management team will fall and Compaq could end up as a smaller force in the IT landscape. The trouble began earlier this month when several HP heirs began voicing opposition. The merger will drag HP deeper into the profit-challenged PC business and eviscerate the company's culture of homespun inventiveness, they say. Walter Hewlett, HP's sole dissenting board member, wrote to the boards of HP and Compaq last week, urging them to unwind the plan. HP and Compaq executives still publicly support the merger. But it appears Compaq is making contingency plans to go it alone if the needed approval from regulators and shareholders doesn't come through. Within hours of a Dec. 7 statement from the David and Lucile Packard Foundation, saying it would oppose the deal in a shareholder vote slated for early next year, Compaq CEO Michael Capellas sent an E-mail to employees, saying that an end to the deal wouldn't halt Compaq's campaign to lessen its dependence on PCs and bolster its share of the enterprise systems market. "Regardless of the circumstances--whether we are part of the new HP or a standalone company--I am confident in our ability to achieve these objectives," he wrote. Compaq officials say there's no about-face and that the company is merely fulfilling its legal obligation to compete as an independent entity until the merger is consummated. But when the deal was revealed in September, Capellas told employees that Compaq needed to pair up with HP to make headway in the enterprise market. "Two significant gaps ... make it difficult for us to be truly recognized as a major player in the enterprise," Capellas wrote at the time. Those gaps, he said, included Compaq's weak position in the Unix market and the fact that it doesn't have a set of open application-integration tools (like HP OpenView) to support interoperability. Compaq's hedging isn't surprising now that some customers are threatening to put away their checkbooks amid the confusion. Worldspan's Lauderdale says he's hesitant to spend any more money with Compaq until the merger is resolved. "The fact that the deal may not come together leaves us in an uncertain mode," he says. "I'm not inclined to make any purchasing decisions until I see where the future lies." Lauderdale says he may look elsewhere the next time he shops for new hardware. The uncertainty may be making it more difficult for Compaq and HP to break into new accounts. Dell Computer customer Glenn Bonner, CIO at MGM Mirage Inc. in Las Vegas, says both Compaq and HP would have a tough sell if they came calling. "I wouldn't make a decision today to switch to Compaq or HP. Dell is not being bought," he says. Compaq officials point out that they have secured a number of high-profile contracts since the merger was disclosed, including sales to American Express, General Motors, and the U.S. Postal Service. HP recently beat sales forecasts for its fourth quarter, company officials say. Still, those opposed to the merger own about 18% of HP's stock. About a third of the 82% of shareholders who have yet to express an opinion are retail shareholders who typically don't vote. That means HP executives, led by CEO Carly Fiorina, must convince 80% of the remaining institutional shareholders that the deal is good for the company and its stock price. Those are tough odds, says Ashok Kumar, a U.S. Bancorp Piper Jaffray analyst. Analysts at numerous other firms also say the deal is in trouble. HP is staying the course. During a conference call last week, Webb McKinney, who's heading integration efforts for HP, said "there is no plan B." HP has created an office of the president for its Business Customer Organization, which is managed by McKinney, tasked with ensuring that customers don't experience any disruptions because of the merger. "Their job is to overcommunicate," McKinney says. Most analysts say HP is better positioned to withstand a protracted struggle over the merger. The company's highly profitable printing and imaging operations brought in almost half of its revenue in 2001. By contrast, almost half of Compaq's sales come from its money-losing PC unit. Observers say an independent Compaq would likely retrench as a smaller company focused on high-margin enterprise products and services. Says Kumar, "That's the only thing that would make sense for them at this point."