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

To: hlpinout who wrote (94352)	12/19/2001 10:05:46 PM
From: hlpinout	Read Replies (1) \| Respond to of 97611

From IDG Net. -- HP/Compaq: Companies fend off Hewlett's charges By Stacy Cowley December 19, 2001 3:50 pm PT HEWLETT-PACKARD AND COMPAQ Computer fired another salvo Wednesday in their increasingly heated battle against criticisms from HP board member Walter Hewlett and other opponents of their planned merger. In a letter to shareholders that was also filed with the Securities and Exchange Commission (SEC) and posted on the companies' Web sites, HP CEO Carly Fiorina and Compaq CEO Michael Capellas argued that Hewlett's objections are based on a "static and narrow view of HP and the industry" and rely on inaccurate financial assumptions. Fiorina and Capellas also suggested in the letter that the interests of the Hewlett and Packard family heirs differ from those of most shareholders. In a 49-page, chart-filled position report accompanying the letter, the executives maintain that Hewlett's merger-related filings with the SEC display "simplistic anti-merger bias" and discount the problems faced by IT firms in the currently depressed market. "Change at this juncture is a necessity," Fiorina and Capellas argue, citing HP co-founder Dave Packard's maxim that "to remain static is to lose ground." In the PC sector, industry dynamics increasingly favor companies with a direct-distribution model and a low cost structure, according to the report, which concludes that HP's current PC sales model is "competitively disadvantaged." The report also defends against charges that the merger will dilute HP's currently strong imaging and printing business. In a section identifying the "risks of standing still," HP warns that remaining as it is inhibits its ability to invest in such growth areas. The companies' integration planning is focused on offering customers a clear HP product road map and a company that's easy to do business with, the report says; for employees, post-merger planning is focused on ensuring clear communication about the company's growth strategy and events timeline. Palo Alto, Calif.-based HP and Houston-Compaq are working to finalize their SEC proxy statement regarding the merger. The document is currently scheduled to be available in early 2002, according to Fiorina and Capellas' letter to shareholders.