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

To: Night Writer who wrote (95226)	2/13/2002 5:16:38 PM
From: Night Writer	Read Replies (1) \| Respond to of 97611

INTERVIEW-HP board no plan to quit if merger fails-director By Peter Henderson SAN FRANCISCO, Feb 13 (Reuters) - The board of Hewlett-Packard Co.<HWP.N> has not made a decision to resign if the $25 billion acquisition of Compaq Computer Corp. <CPQ.N> falls through, a board member said on Wednesday, arguing that investors should judge the deal on its business logic alone. Tensions have risen in the fight between management and founding family scion Walter Hewlett amid a flurry of emotion-laden statements, ads and letters ahead of a March 19 vote by Hewlett-Packard shareholders on the deal, which would be the largest ever in the computer industry. Each side has questioned the other's business sense and presentation of the record. Richard Hackborn, a board member and the former head of Hewlett-Packard's printer business, said in an interview with Reuters that there was too much speculation about whether the board and management would quit if the merger fails. "Nobody is talking about leaving on the board, nor is anyone talking about asking anyone to leave," Hackborn said, referring to top managers including Chief Executive Carly Fiorina. "That has got to be taken out of the equation" for investors. "It is not all or nothing," he added, when asked if the board's future was tied to the merger. "If the shareholders don't feel that way, we will do everything possible to explore the next best possible alternative." A previous statement by Hackborn in The New York Times had been interpreted as a threat to leave if the deal failed, but he said that was not the case. A serious bone of contention between merger proponents and Walter Hewlett, who has the backing of an 18 percent bloc of family-controlled stock, is whether the board has fully explored alternatives to the merger. "To claim that notion that HP's board has considered, debated and rejected every alternative completely defies the record and common sense," Walter Hewlett told Reuters in an interview on Tuesday. Six board members, including Hackborn, responded to Hewlett in a letter on Wednesday that they had concluded 2-1/2 years ago that Hewlett-Packard was losing ground and "decisive action was required". "You have insulted our personal commitment and fiduciary responsibility," they said in the letter to Hewlett. In a regulatory filing, Hewlett-Packard has listed a variety of specific proposals considered, and Hackborn said they had been vigorously debated in board meetings and teleconferences. "A number of alternatives were discussed in an informal manner," Hackborn said. "I had some conversations with Walter about this on a one-on-one basis." Fiorina's recruitment had spurred further debate. Hackborn said a core issue for years had been the future of the personal computer division. Merger proponents believe Hewlett-Packard can produce PCs cheaper and make a profit by selling them directly, as Compaq does. Hewlett counters that the company should trim the business since it produces a slim profit at best. Hackborn argued that Hewlett-Packard could fix the PC business and had long considered selling or dropping it. "I don't think there is a buyer. Or if there is, it is pennies on the dollar," Hackborn said. As for shutting it down, "you can imagine the short term impact. You know PCs are a big part of HP's revenue." The Compaq deal would allow Hewlett-Packard to keep PCs and make a profit without sacrificing short-term results, he said. Hewlett's vision would not, he added. ((Peter Henderson, San Francisco Newsroom 415 677 2578)) REUTERS * end of story *