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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (94395)	2/5/2002 10:59:27 AM
From: Don Lloyd	Read Replies (2) \| Respond to of 132070

KT - bloomberg.com H-P, Compaq Pay for Cheerleaders By Graef Crystal Las Vegas, Feb. 5 (Bloomberg) -- Carly Fiorina, the embattled chief executive officer of Hewlett-Packard Company and Michael Capellas, her counterpart at Compaq Computer Corp., have just hired a claque. That's ``an organized body of hired applauders'' and ``a body of subservient followers always ready to applaud their leader,'' according to the Oxford English Dictionary. Major singers at the La Scala opera house in Milan routinely hire claques to cheer wildly at the conclusion of each aria and, for good measure, to boo any rivals heartily. Fiorina and Capellas want their claque to cheer the planned merger of their personal-computer companies, which may come to a shareholder vote as early as March, and to boo opponents such as the Hewlett and Packard families. The only differences between the CEOs and the opera singers are: -- The size of the claque, which would overfill La Scala and spill into the surrounding streets, -- The cost, a staggering $635 million-plus during the two years following completion of the merger, and -- The source of all the money. Fiorina and Capellas aren't footing the bill themselves. Their companies' already beleaguered shareholders will pay. ..... Looking at the performance of the two CEOs involved, though, the proposed merger seems to be a union of the lame and the blind. Both got their positions in July 1999, and both performed terribly between their start dates and last Friday Fiorina delivered a negative 49 percent return for shareholders during her tenure. The return on the Nasdaq-100 index, a benchmark for companies similar to Hewlett-Packard, was negative 33 percent during the period. For the Standard & Poor's 500 Index, the comparable figure was negative 18 percent. Capellas did even worse, with a negative 53 percent return. The decline compares with returns of negative 30 percent for the Nasdaq-100 and negative 16 percent for the S&P 500. Shares for Free In earlier articles about the two, I noted the emphasis in their employment agreements on shares of free stock, rather than more traditional grants of stock options. After analyzing the numbers and considering that free shares are a lot safer than a larger number of option shares, I predicted that the two executives weren't very bullish about their prospects for success. What has happened since they took their jobs shows that they had a realistic impression of their abilities. It's little wonder that they decided to go the route of opera singers and pay people to cheer their plan to combine. Regards, Don