Walter Hewlett Issues Statement on Hewlett-Packard Earnings
PALO ALTO, Calif., Feb. 13 /PRNewswire/ -- Walter B. Hewlett, on behalf of The William R. Hewlett Revocable Trust and its trustees, today issued the following statement regarding the first quarter 2002 earnings announcement of Hewlett-Packard Company (NYSE: HWP - news):
I am pleased to see Hewlett-Packard continue to perform well. These
results further confirm that Hewlett-Packard does not need to acquire
Compaq -- company with a struggling commodity computing business that
accounts for approximately 65% of its revenues. HP is a strong company
with a deep bench of experienced operating executives who have managed
the business well during this period.
HP's results also spotlight the dramatic divergence between HP and
Compaq's performance since this merger was announced. Even prior to HP's
guidance today, consensus estimate for FY2002 earnings of $1.04 was
virtually unchanged from the consensus estimate at the time of the merger
announcement. Whereas, Compaq's current estimate for 2002 has declined
dramatically, down 59% over the same period, from $0.66 to $0.27 as of
today.
According to HP's own proxy statement, the proposed merger with Compaq
came as a result of a phone call from Michael Capellas, Compaq's CEO, to
Carly Fiorina just a few months prior to the announcement of the
transaction. The proposed merger was not part of any discussions of
strategy over the past two and a half years. Rather, the board initiated
transactions such as the spin-off of Agilent, the proposed acquisition of
PricewaterhouseCoopers' consulting business, and the pending acquisition
of Indigo. These transactions were targeted to focus on HP's core
strengths -- a markedly different strategy than taking on a large,
struggling commodity computing business.
We believe that: trying to out-Dell Dell, while at the same time trying
to out-IBM IBM, is a strategy that will leave HP doomed to be a leader in
nothing; no company can successfully be all things to all customers.
We believe that HP's strong position in its core markets provides the
basis for attractive alternatives. There is significant value to be
unlocked with a focus, execute and grow strategy. We believe HP needs to
focus on its strengths. Outlined are three guiding principles:
* Make a differential investment in imaging and printing to protect HP's
market position and capitalize on the growth opportunities ahead.
Imaging and printing, the "crown jewel" of the HP portfolio, is a
business with healthy growth and margins. We believe HP must invest in
that market to protect its franchise and capitalize on emerging growth
opportunities. HP must, we believe, focus R&D resources to capitalize
on opportunities in enterprise printing, digital commercial printing,
multifunction printers, digital cameras, image handling, and color
copying.
* Bolster its enterprise position by filling key gaps. HP has a strong
position and reputation in high and mid range computing. HP's UNIX
position is valuable and we believe that NT will not quickly replace
UNIX in high-end applications in the enterprise. HP needs a stronger
presence in software and high-end consulting services which drive
hardware sales rather than a dramatic increase in exposure to commodity
computer hardware. We believe that HP has a strong platform to compete
in high-end enterprise computing and is poised to strengthen its UNIX
position with the introduction of the high-performance and
cost-effective Itanium chip that HP co-developed with Intel. HP's
knowledge of this architecture will also allow the Company to
strengthen its position in the open-architecture NT server space
organically through R&D and marketing. The profitable services
business, which has a wonderful customer reputation, should grow
organically and with targeted, strategic acquisitions.
* Focus on profitability not scale in PCs. We firmly believe that HP
should not double down on its exposure to commodity PCs and that HP
would not benefit by attempting to be number one. We believe HP can be
successful in its Access business by focusing on consumer PCs and
innovative new access devices with its excellent brand, technology and
distribution capabilities. We note that HP is on the right track by
outsourcing its PC manufacturing. Buying Compaq, one of the largest
producers of PCs, is contrary to that strategy and a large step
backwards for HP.
ADDITIONAL IMPORTANT INFORMATION
On February 5, 2002, Walter B. Hewlett, Edwin E. van Bronkhorst and the William R. Hewlett Revocable Trust (collectively, the ``Filing Persons'') filed a definitive proxy statement with the Securities and Exchange Commission relating to their opposition to the proposed merger involving Hewlett-Packard Company and Compaq Computer Corporation. The Filing Persons urge stockholders to read their definitive proxy statement because it contains important information. You may obtain a free copy of the Filing Persons' definitive proxy statement and other soliciting materials on the Securities and Exchange Commission's website at sec.gov, at the Filing Persons' website at votenohpcompaq.com, or by contacting MacKenzie Partners at 1-800-322-2885 or 1-212-929-5500, or by sending an email to proxy@mackenziepartners.com.
For additional information, visit our website at votenohpcompaq.com.
MacKenzie Partners, Inc., 105 Madison Avenue, New York, New York 10016, proxy@mackenziepartners.com, (800) 322-2885 (toll-free), (212) 929-5500 (call collect), or visit votenohpcompaq.com
CONFIDENTIAL VOTING NOTICE FOR EMPLOYEE PLAN SHARES
It is important for all employees of HP to know that their vote is confidential for all shares owned in the HP 401(k) plan. Strict confidentiality is assured under the terms of the 401(k) plan and applicable federal law. Therefore employees should feel free to vote their 401(k) shares in their best interest without fear of intimidation or reprisal.
SOURCE: Walter B. Hewlett
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