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

To: Elwood P. Dowd who wrote (95556)	2/28/2002 6:00:53 PM
From: Night Writer	Read Replies (1) \| Respond to of 97611

Analysts: HP-Compaq Merger Vote Too Close to Call Feb 28, 2002 (NewsFactor.com via COMTEX) -- An analyst told NewsFactor on Thursday that the controversial proposed merger between Hewlett-Packard (NYSE: HWP) and Compaq Computer (NYSE: CPQ) is "too close to call." Andrew Efstathiou, program manager of e-sourcing strategies at Boston, Massachusetts-based research firm The Yankee Group , told NewsFactor that in his view, neither company's success depends on the merger, despite HP CEO Carly Fiorina's contention that her company will "slowly wither" if HP shareholders vote against the proposed deal on March 19th. Compaq shareholders will vote on the US$21 billion plan March 20th, a day after HP shareholders cast their ballots. Both companies' success "depends upon introducing new products and services into the marketplace," Efstathiou said. "The road map for the future has not been clearly defined, and it's moving too fast to depend on what existed before." Survival of the CEOs IDC analyst Alan Promisel told NewsFactor that while Fiorina's assertion that HP will "wither" is a bit strong, the comment is understandable given the precarious nature of Fiorina's present position. "Essentially, Fiorina's ability to keep the CEO position at HP is contingent upon the merger being voted through," Promisel said. Chances for Success Peter Kastner, chief research officer at Aberdeen Group , told NewsFactor that the merger likely will be approved because the basic question that shareholders are being asked to vote on has changed subtly. "Originally, the question was a simple up or down vote on the merger's merits," Kastner said. "Now, the vote is perceived as an endorsement of Fiorina's vision or Walter Hewlett's vision, and Walter has not really detailed a plan" in the way that Fiorina and those in her camp have. Yankee analyst Efstathiou said the question shareholders ultimately must answer is whether Fiorina and Compaq CEO Michael Capellas can successfully merge their companies and subsequently roll out new products and services -- or whether the two companies can successfully integrate their cultures. Making It Work Kastner said that Fiorina's and Capellas' shared vision is to survive and prosper by getting very big through the merger. However, making the merger work will be much harder than many imagine. "Sure, cutting expenses in the first six months is easy," Kastner noted. "But gaining sustainable market share while reinventing the company is a balancing act few could manage." Efstathiou said that, historically, neither HP nor Compaq has been particularly successful at integrating acquired companies into existing corporate culture. "But neither Fiorina nor Capellas were running the firms when those mistakes were made," Efstathiou said. Efstathiou also noted that both companies have a high percentage of long-term employees, which could exacerbate integration issues. By Robyn Weisman