The More HP Stockholders Know About the Proposed Merger With Compaq, The More
They'll Want to Vote No
PALO ALTO, Calif., Feb. 21 /PRNewswire/ -- Walter B. Hewlett, on behalf of
The William R. Hewlett Revocable Trust and its trustees, today placed an
advertisement in The Wall Street Journal regarding the proposed merger of
Hewlett-Packard (NYSE: HWP) and Compaq Computer Corporation (NYSE: CPQ). The
advertisement will also appear Friday in The New York Times, The Washington
Post, The San Francisco Chronicle, and The San Jose Mercury News. The text of
the advertisement is as follows:
"Attention: All Hewlett-Packard Stockholders
KNOW MEANS NO
THE MORE YOU KNOW ABOUT THE HP/COMPAQ MERGER
THE MORE YOU 'LL WANT TO VOTE NO
BAD TRACK RECORD
Did You Know: Shareholder value has suffered under the current CEO.
* HP's share price has dropped 62% overall, and 27% versus an index of
comparable companies under the current CEO.(1)
Did You Know: HP management has a track record of being overly-optimistic
and sometimes dead wrong.
* HP missed projected earnings in four of the last six quarters.
* " ... offering apologies for missing the forecast to HP's board at an
emergency meeting...Fiorina told analysts she was raising HP's sales
growth target for fiscal 2001 from 15% to as much as 17%."(2)* Sales
actually declined 7.5% in 2001.
* "Certain expectations she led shareholders to adopt were not fulfilled,
and could not have been fulfilled," said a leading analyst.(3)*
Did You Know: HP's merger math doesn't add up.
* HP's CEO says the merger with Compaq will be accretive even though
Compaq's forecasted earnings have declined dramatically since the
merger was announced. Based on First Call estimates, Compaq's CY 2002
expected earnings have declined 59.1% and CY 2003 have declined 44.3%
since the merger was announced.
* Management makes aggressively low assumptions about revenue loss.
Analysts estimates and precedent transactions indicate the actual
revenue loss will be double management's estimate, more than enough, we
believe, to outweigh any benefits of cost savings.
Did You Know: An independent survey of over 800 marketing professionals
picked the HP CEO as the CEO "who most harmed their brands in 2001."(4)*
Did You Know: HP's CEO has never led a transaction of this scale or
complexity but does have a record of failed integration and acquisition
attempts.
* Her previous attempt to integrate two large organizations with
different cultures was when she led the Lucent joint venture with
Philips Electronics NV. The venture fared so badly it was discontinued
at a loss for both companies one year following its inception. HP's CEO
called the Philips venture "the biggest mistake of her career."(5)*
BAD IDEA
Vote No: The proposed merger would dilute by 35% stockholders' ownership
in HP's crown jewel, the high-growth, high-margin, Imaging & Printing
business while doubling stockholders' exposure to a troubled commodity PC
business.
Vote No: HP's strategic position will not materially improve. The merger
would:
* Divert financial resources and management's attention from Imaging &
Printing
* Not materially improve HP's position in mid-range and high-end servers
and high-end services
* Do little to increase HP's consulting and outsourcing capabilities
* Double HP's exposure to low-end, commodity computing businesses
Vote No: The integration risk of the proposed merger is substantial and
unacceptable.
* "No large scale high tech merger has ever worked -- ever."(6)
Technology mergers are extremely difficult to integrate due to the
velocity, complexity and competitiveness in tech markets. And this IS a
technology merger.
* HP's anticipated 18-24 month integration(7) is a lifetime in the
technology industry.
Vote No: The financial impact of the proposed merger on HP stockholders
has been and would be negative.
* HP is paying a huge premium for Compaq-more than twice the average
multiple of past computing mergers (48 times CY 2002 earnings vs. 19
times forward earnings for comparable transactions) and more than twice
HP's own multiple.(8)
* We expect HP stockholders would lose more than $4.50 per share as a
result of the transaction.(9)
* Since the announcement of the proposed merger HP stockholders have lost
approximately $7.7 billion relative to an index of comparable
companies.(1)
Vote No: HP won't reveal the CEO's post-merger compensation.
* HP has reviewed and discussed what the CEO's compensation package would
be if the proposed merger is approved. HP says its CEO's compensation
will be greater than it is now -but how much greater? HP repeatedly
refused to disclose the proposed terms of the package. Why won't HP
disclose this information? You have the right to know what financial
interest management has in promoting the Compaq merger.
HP STOCKHOLDERS COULD REALIZE $14 to $17 MORE
PER SHARE WITHOUT COMPAQ(10)
THREE GUIDING PRINCIPLES UNDERLYING THE STRATEGIC ALTERNATIVES CAN BE
SUMMARIZED AS FOLLOWS:
* Re-allocate investment in Imaging & Printing to defend HP's position
and capitalize on emerging growth opportunities
* Build mid and high-end enterprise position by filling key gaps
* Focus on profitability, not scale, in PCs
BY FOLLOWING A "FOCUS AND EXECUTE" STRATEGY, WE BELIEVE HP HAS THE
POTENTIAL TO:
* Realize $14 to $17 greater value per share relative to the proposed
merger with Compaq(10)
* Double operating margins from 4.2% to 8.4% by focusing on high-margin
businesses and creating a more attractive business mix relative to the
proposed merger with Compaq(10)
We urge you to vote "NO" on the Compaq merger by checking the "AGAINST"
box on your GREEN proxy. Simply sign, date and mail back your green card
promptly. Please do NOT return any white proxy cards. A $25 billion mistake is
not the HP Way.
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
www.VoteNoHpCompaq.com
ATTENTION HP EMPLOYEES
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.
*Permission to use quotation was neither sought nor obtained.
1. The index of comparable companies represents the combined common
stock performance of Accenture Ltd, Apple Computer, Inc., Computer
Sciences Corporation, Dell, Electronic Data Systems Corporation, EMC
Corporation, Gateway, Inc.,
International Business Machines Corporation, KPMG International,
Network Appliance, Inc., and Sun Microsystems, Inc. These comparable
companies are the same companies used by Goldman Sachs in performing
its "Selected Companies Analysis" in connection with rendering its
fairness opinion to HP.
2. Business Week, 2/19/01.
3. San Francisco Chronicle, 12/9/01.
4. Bruised and Battered Brands Poll 2001, Liquid Agency, Inc.-December
2001.
5. "H-P names Carly Fiorina, A Lucent Star, to be CEO," 7/20/99.
6. David Yoffie, Harvard Business School, 12/17/01.
7. Merger Communication Toolkit sent to HP managers for use in
communicating with HP employees in connection with the merger, filed
by HP Pursuant to Rule 425 Under the Securities Act of 1933 on
1/22/02.
8. Based on stock prices and First Call consensus estimates as of
February 15, 2002 and the mean of the following precedent
transactions: HP/Apollo in April 1989, AT&T/NCR in December 1990,
Gateway/Advanced Logic Research in June 1997, Compaq/Tandem in June
1997 and Compaq/DEC in January 1998.
9. Based on assumptions outlined in a report titled "HP is Misleading
Stockholders: Financial Analysis Illustrates that Compaq Merger
Destroys Shareholder Value" filed with the SEC on 1/23/02.
10.Based on assumptions outlined in a report titled "HP Has Higher
Value, Lower Risk Strategic Alternatives to the Proposed Merger"
filed with the SEC on 2/19/02.... "
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 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 any
other soliciting materials relating to the Filing Persons' solicitation on the
Securities and Exchange Commission's website at www.sec.gov, on the Filing
Persons' website at www.votenohpcompaq.com, or by contacting MacKenzie
Partners, Inc. at 1-800-322-2885 or 1-212-929-5500, or by sending an email to
proxy@mackenziepartners.com. |
