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

To: Night Writer who wrote (95558)	2/28/2002 6:11:38 PM
From: Night Writer	Read Replies (1) \| Respond to of 97611

Battle for Hewlett-Packard Shareholders Turns to Wall Street NEW YORK, Feb 28, 2002 (Austin American-Statesman - Knight Ridder/Tribune Business News via COMTEX) -- In a last-ditch pitch to Wall Street, Hewlett-Packard Co. chief executive Carly Fiorina deployed a parade of business heavyweights Wednesday who support her company's proposed acquisition of Compaq Computer Corp. Before dozens of analysts, she played a videotape of pro-merger testimonials from several well-known names, including DreamWorks co-founder Jeffrey Katzenberg, AOL Time Warner Inc. Chairman Stephen Case and New York Stock Exchange chief Richard Grasso. The message from all: bigger is better. "This deal makes a lot of sense to our company, said Citigroup chairman Sanford Weill in one taped testimonial, adding that a company's scale "really is important." Wednesday's daylong plea to the investment community to support the controversial deal comes before shareholders vote March 19. Even on Wall Street, few are willing to predict the outcome. Andrew Neff of Bear Stearns said the shareholder vote still seemed "too close to call," although he added that shareholders tend to go with the wishes of management. Rob Enderle, an analyst with Giga Information Group, said that although Wednesday's presentation was a strong effort to win Wall Street's support, it might not be enough to bring about the merger. "The business environment has certainly changed a lot since this merger was announced," he said. "The Enron scandal has created far too much risk for a lot of institutional investors." Since the acquisition was announced on Labor Day, Walter Hewlett, son of one of the company's founders, has emerged as its most vocal opponent. For months, he has argued the deal would make the company too dependent on low-profit personal computers. David Packard, son of the other founder, also has pledged to fight the merger. Indeed, both families and the boards that run their trusts have vowed to vote the 18 percent of shares they own against the merger. On top of this opposition, several institutional investors with significant blocks of H-P stock have said they will oppose the merger. The latest came Tuesday from Brandes Investment Partners, which as of December owned 1.3 percent of the shares. Fiorina and other top executives repeatedly insisted Wednesday that the California company's $21.7 billion purchase of Houston-based Compaq would create new opportunities for the global provider of computing and imaging services. "All of our businesses are not where they need to be," said H-P Chief Financial Officer Bob Wayman. He said the company's pro forma earnings per share in 2003 could be $1.51 with Compaq or $1.35 without it. Although Fiorina and the others emphasized the merger's financial up sides, they also railed against the heirs, saying the heirs were trying to mislead investors with a string of deceptions, the latest of which is a claim that Fiorina and Compaq CEO Michael Capellas could see huge payoffs. Hewlett charged Tuesday that Fiorina and her counterpart at Compaq, Michael Capellas, would gain $117.4 million in bonuses and pay raises over two years if the merger's goes through. Fiorina called Hewlett's charges "one of his most egregious attempts yet at distraction." "How can we disclose what has not yet been decided?" she asked, referring to compensation plans. Fiorina also tried to counter Hewlett's charges that employees were overwhelmingly against the merger by emphasizing that her company's management team was well-acquainted with the employees and that by and large, they were enthusiastic about the merger. By Shelley Emling To see more of the Austin American-Statesman, or to subscribe to the newspaper, go to austin360.com