To: rudedog who wrote (169036 ) 3/18/2002 9:04:27 PM From: stockman_scott Respond to of 176387 Compaq reputation suffers in HP merger fight By Jeff Franks Monday March 18, 8:14 pm Eastern Time HOUSTON, (Reuters) - Compaq Computer Corp.'s (NYSE:CPQ - news) reputation as an industry pioneer with a history of innovation has taken a beating in the lead-up to its proposed merger with Hewlett-Packard Co. (NYSE:HWP - news), and not everyone is happy about it. Dissident HP shareholders have portrayed the Texas company as the weak sister in the $21 billion deal, much to the consternation of longtime Compaq employees, a former high-ranking insider said on Monday. Compaq loyalists believe their company did more to advance the age of personal computing and has a better brand name than HP, even though it is destined to disappear if the merger goes through. ``Compaq is an industry market maker and HP is not. End of story,'' a Compaq supporter said. Bitterly divided HP shareholders are to vote on Tuesday in an election that analysts say could go either way. Compaq shareholders were to vote on Wednesday, but there is no organized opposition to the deal. Dissident HP shareholders led by family members of the company founders, can barely tolerate the idea of merging with Compaq. In a stinging assessment, they have portrayed Compaq as a company on the way down, too dependent on low-profit personal computers to be worthy of innovative HP. ``We are selling a good business cheap and buying a bad one for a premium,'' scion Walter Hewlett told reporters recently. It was not always that way for Compaq, whose name once evoked corporate excellence and technological innovation. The company that began as a sketch on a restaurant placemat in Houston in 1982 helped pioneer the portable PC and server industries. It became the youngest publicly owned company to reach the Fortune 500 and $1 billion in revenues, then grew into the world's largest computer maker. But in recent years, it has lost the No. 1 position to Texas rival Dell Computer Corp., suffered top-level executive turmoil and seen its earnings shrink. A once-soaring stock price that made the company a Wall Street darling has fallen to as low as $7.28 in recent months and closed on Monday up three cents to just $10.36. Many longtime employees are angry at the company's downfall and what they believe has been a public humiliation in the HP fight. They think Compaq management has not defended the company. ``The mood in the company is very sour, very sad,'' the former insider said. ``People feel like (Compaq chief executive Michael) Capellas has failed the employees and the shareholders.'' ``It's not only a sad day for Houston, but also a sad day for the world technology industry because Compaq is a company that shaped the industry on so many fronts.'' At the sprawling company headquarters in suburban Houston, employees watch and wait for Tuesday's vote, worried about their future and the company's. HP and Compaq executives said 15,000 jobs will be cut from the combined workforce of 150,000. ``There are so many rumors,'' said one Compaq worker. ``People are worried about their future jobs and assume that even if there is no merger, there will be an impact of some kind.'' ``We're in the final days and hours before the shareholders have an opportunity to weigh in on where they stand in this vote. We're certainly anxious to hear from them,'' Compaq spokesman Arch Currid told Reuters.