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

To: Gottfried who wrote (95899)	3/9/2002 11:51:11 AM
From: hlpinout	Read Replies (2) \| Respond to of 97611

Gottfried, I agree with your barber and didn't think it was the best decision to merge. However if it fails now, I believe CPQ will take a beating and would hate to see the shareholders go through that again even short term (1-2 quarters). Regards, hio -- March 09, 2002 03:03 Houston Chronicle Computing Column By Dwight Silverman, Houston Chronicle Mar. 9--In March 19 and 20, the technology landscape is going to change dramatically, particularly here in Houston. On those days, the respective shareholders for Hewlett-Packard and Compaq Computer Corp. will vote on the largest -- and most contentious -- high-tech merger in history. From its announcement last September, the plan to unite Compaq and HP has drawn passionate opposition. At first it came from Wall Street, whose initial take on the deal sent the stocks of both companies plummeting. Later, the families of HP's founders came out squarely against the deal. Both Walter Hewlett, who is on HP's board, and David Packard said they believed merging with Compaq would ultimately dilute the value of HP's stock. And Hewlett has gone beyond just stating his intention to vote his shares against the deal. He's actively campaigned against it, sparking a bitter war of words with HP that looks more like the mudslinging found in a political race. Recent events have turned the tide in favor of the merger. Earlier this week, a major research firm that advises institutional investors gave its blessing. The next day, the Federal Trade Commission cleared the merger on a 5-0 vote. But some analysts are saying the chances of the merger being approved by shareholders remains at 50-50. However it goes, the vote is going to be very, very close. I thought the merger was a bad idea from the beginning (see www.chron.com/badidea), and unfolding events have not changed my mind. If you're an HP and especially a Compaq shareholder, I think it's important to vote against it. Here's why: IT'S BAD FOR CONSUMERS. I'm always astonished when tech companies claim that their merger with a competitor will result in more innovation and thus better products. Who are they trying to kid? Fewer competitors means less pressure on individual players to differentiate their products through innovation. The best example of that is Microsoft's Internet Explorer. When Netscape Communications' browser had the greatest market share, competitive forces inspired both of them to innovate at breakneck speed, with new browser releases -- packed with useful new features -- appearing every few months. Today, Internet Explorer's development cycle is tied to the development of new versions of the Windows operating system, at a much slower pace. At its core, Internet Explorer has remained basically unchanged since version 5.0. By merging with Compaq, HP is taking one of its biggest competitors out of the picture. That's one less player to keep HP on its toes. IT'S BAD FOR BOTH COMPAQ AND HP. By agreeing to be swallowed by HP, Compaq has raised the white flag way too early. With Compaq stumbling along in one of the toughest tech industry downturns in history, HP's welcoming arms may have seemed like a safe port in a storm to Compaq's frustrated management team. But the storm is subsiding, and both Compaq and HP are starting to ride higher in the water. Compaq posted a surprise profit for the final quarter of 2001, and both its executives and analysts predict healthy numbers by the second half of the year. HP also is faring better. These two don't need each other as much as they may have last September. But more compelling will be the internal pain a merger will cause. Despite the lovey-dovey noises made by HP CEO Carly Fiorina and Compaq CEO Michael Capellas, these two companies couldn't be much more different. HP has core traditions it adheres to; Compaq's only tradition is that it lives for change. Need an analogy from another industry? HP's the energy company executive with a Stanford MBA; Compaq's the oil-field engineer figuring out creative ways to get crude out of the ground. These folks usually don't mix well at dinner parties. Large hardware company mergers almost never work out well, particularly when corporate cultures are so varied. The biggest example prior to this deal is Compaq's acquisition of Digital Equipment Corp. Despite Compaq managers' insistence that all's well today, the company's troops in the field will tell you privately it still suffers from indigestion. And the more cynical among them will tell you that Digital's poisonous culture may have overwhelmed Compaq's. IT'S BAD FOR HOUSTON. As I mentioned earlier, Compaq's clearly on a rebound. If the merger goes through, there will be thousands of layoffs as a result -- and if history is any indicator, Compaq will suffer the majority of them. If there is no merger, and Compaq continues to recover and even grow, Houston would gain jobs, not lose them. Fiorina has said HP will maintain a "significant" presence here, but that doesn't make up for Houston's hosting the headquarters of one of the most influential technology companies in the world. And I suspect her offhand comment that HP might relocate some of its work force here because of the lower cost of living is lip service to keep the chamber-of-commerce types at bay. THE WELL IS TAINTED. Finally, one of the biggest reasons shareholders should vote against this deal is the contentious nature of the battle over it. Merging two companies as different as Compaq and HP requires consensus, and there's nothing close to that here. The bitter fight has had its effect on employees -- surveys by anti-merger forces of HP workers in multiple communities have shown overwhelming opposition to the merger. I suspect a survey of Compaq employees would find the same. If the merger goes through, the resentment on the part of employees and shareholders is going to be substantial. No matter how good the theoretical numbers appear on a spreadsheet, they can't make up for the damage done to loyalty, dedication and inspiration in the people who actually make up the company. The bean-counter mentality that causes executives and bottom-line investors to dream up nightmare combinations like this one never seems to take that into account. --Send e-mail to dwight.silvermanchron.com. His Web site is at www.dwightsilverman.com. -----

To: Gottfried who wrote (95899)	3/9/2002 12:18:23 PM
From: The Duke of URL©	Respond to of 97611

Yeah, but unlike Calpers, his second biggest holding isn't AMD!!! That alone, gives an inkling of the precise nature of the calpers decision making process. :)) gotta dash

To: Gottfried who wrote (95899)	3/9/2002 4:45:13 PM
From: Jerome	Read Replies (1) \| Respond to of 97611

Gottfried.... there are lots of barbers out there....find one that likes the deal and take your clippings elsewhere. Hlpinout make a case for some dire predictions if the merger fails. From what I have seen, those opposed to the merger are making the most noise...I hope they are walking into a bear trap. Some one posted that Fidelity was a recent buyer of HWP and CPQ.... I don't know how many shares they bought, but they did not buy them with the idea of share price shrinkage. Putnam funds announced that they will vote in favor of the merger, but it got almost no press. From a journalistic standpoint the story would be in the failure of the merger and the influence of Wally. If the merger goes through ...there is no story. That's why Maria B looked so shaken when the ISS announcement was not what she anticipated. She tried to question the legitimacy of ISS on this matter, and got caught short when they said that they went through this process of merger/no merger about 6000 times with other companies. They do have history on their side. Jerome