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

To: Elwood P. Dowd who wrote (97349)	4/24/2002 2:43:25 PM
From: Night Writer	Read Replies (1) \| Respond to of 97611

HP's Fiorina denies misleading investors on targets By Caroline Humer WILMINGTON, Delaware, April 24 (Reuters) - Hewlett-Packard Co. <HWP.N> Chief Executive Carly Fiorina on Wednesday denied misleading investors about financial forecasts for its planned merger with Compaq Computer Corp. <CPQ.N>, saying a second, lower set of internal numbers did not need to be disclosed. The internal financial estimates for fiscal 2003, which were below the company's public targets for its planned merger with Compaq, were not forecasts, she argued, and didn't need to be disclosed to shareholders or the HP board. Fiorina made the comments during testimony in the Delaware business court, where the Palo Alto computer and printer maker is defending itself against allegations made by dissident board member and son of a founder, Walter Hewlett. In the trial -- which followed a lawsuit filed by Walter Hewlett in March -- Hewlett's lawyer Stephen Neal, said that the numbers prepared by the companies' business managers in February and March showed that HP knew it would fall short of the financial targets for the merged company. Speaking in court on Tuesday, Neal argued that HP should have disclosed that the numbers showed, among other things, that 2003 operating profit would come in at $5.2 billion, not $6.9 billion, as HP had publicly indicated in its documents to shareholders ahead of the March 19 merger shareholder vote. Fiorina said the lower estimates generated internally at HP were not forecasts, saying that managers tended to underestimate the numbers to ensure they met their targets. For the second day in a row, she said she was certain the company will meet its goal for $2.5 billion in cost savings and a loss in revenue for the combined company of 4.9 percent. "We could blow this in many ways. Our plan is not to," Fiorina said. She also said that "running a business requires a disciplined identification of gaps between where we need to be and where we are and a disciplined closing of those gaps." Fiorina, who was visibility exasperated after 6 hours of testimony over the past two days, again denied allegations of vote buying. Walter Hewlett's attorneys allege that HP management had tried to coerce Deutsche Bank into voting for the merger by threatening the withdrawal of future investment banking business. Deutsche Bank worked for HP as a proxy solicitor and was entitled to a $1 million bonus if the deal went through, Walter Hewlett's lawyer said on Tuesday. The investment bank switched its vote after a conference call the morning of the shareholder vote, he said. Deutsche Bank said its asset management team was not influenced by banking relationships with HP when casting its vote. Neal on Wednesday asked Fiorina if it took a "beautiful mind" to understand that Deutsche Bank wanted to keep HP management happy to retain its business. Fiorina, however, said she had no way of knowing that. "That's your inference, not mine. I can't draw any conclusions about what's going on in their heads," Fiorina said. She also said: "We were clear with every shareowner that we spoke with that we did not want them to vote against the merger." ((Caroline Humer, New York Technology Desk, 646-223 6000)) REUTERS * end of story *

To: Elwood P. Dowd who wrote (97349)	4/24/2002 2:44:11 PM
From: Night Writer	Respond to of 97611

HP Exec Denies Merger Memos Mislead WILMINGTON, Del., Apr 24, 2002 (AP Online via COMTEX) -- Hewlett-Packard Co. chief Carly Fiorina became agitated on the witness stand Wednesday under questioning about company documents that allegedly show the purchase of Compaq Computer Corp. would fall short of its financial goals. In the second day of dissident HP director Walter Hewlett's lawsuit against the company, Hewlett attorney Stephen Neal asked Fiorina how the teams that were planning the merger arrived at their financial estimates. Charts introduced as evidence Tuesday showed growing gaps between the latest revenue and earnings projections and the figures HP had promised to investors. Sighing several times in exasperation, Fiorina said Neal was drawing the wrong conclusions about the meaning of the charts because they were taken out of context, as if someone looked at selected snapshots instead of "the whole movie." She said the increase in the gaps was not surprising, because the business units that contributed to the ongoing assessments deliberately set relatively low targets so they could overshoot them later. She called the process "sandbagging." "Running a business is about identifying gaps between where we need to be and where we are, and the disciplined closing of those gaps," Fiorina said. "That's how you produce results." At one point during the tense exchange, Neal said somewhat curtly, "Let me ask the questions." Fiorina responded, "Sir, you are accusing the CEO of a publicly traded company of lying." "I'm only asking you questions right now," Neal replied. Fiorina also had stubbornly refused to concede points to Neal on Tuesday, the trial's first day. When she finally stepped off the witness stand Wednesday, she had testified for a total of seven hours. A preliminary tally released last week found that 51.4 percent of HP shares were voted for the Compaq deal, and 48.6 percent came out against. That gives HP a lead of 45 million shares. Walter Hewlett is asking a Delaware judge to overturn the vote on the grounds that HP misled shareholders about the progress of the merger planning and improperly coerced at least one investor, Deutsche Bank's investment arm, by threatening to withhold future business from Deutsche Bank. Neal asked the trial's second witness, HP chief financial officer Bob Wayman, about the last-minute lobbying he did to win over Deutsche Asset Management, which had been opposed to the deal but switched 17 million shares for the merger on the day of the vote. Wayman said he assumed all along that Deutsche Asset Management would vote for the deal, because Deutsche Bank analyst George Elling was supportive of it and because Deutsche Bank had agreed to provide HP "market intelligence" during the proxy fight, for $1 million fee, with a $1 million bonus if the deal was approved. "I would not want somebody not supporting this merger out there with my investors," Wayman said. Wayman said that a few days before the March 19 shareholder vote, he asked Benjamin Griswold, a Deutsche Bank vice chairman, how the investment management side of the company was going to vote on the deal. Griswold reported back that the Deutsche money managers were going to vote for it. But then two days before the vote, HP's proxy solicitor informed the company that Deutsche Asset Management actually was going to reject the Compaq deal. Wayman said he was agitated and frustrated with both the news and the fact that he got wrong information. Griswold was apologetic and embarrassed, Wayman said, and arranged a conference call an hour before the shareholder vote with Deutsche proxy teams so Wayman and Fiorina could make what HP called its first real chance to lobby Deutsche Asset Management to support the deal. Less than two hours later, Wayman said, he was told Deutsche Asset Management would support the deal after all. Deutsche Bank has said its money managers acted in the best interests of their investment clients. In afternoon trading Wednesday on the New York Stock Exchange, shares of Palo Alto, Calif.-based HP were down 67 cents, nearly 4 percent, to $17.37. Shares of Houston-based Compaq were up 15 cents, or 1.5 percent, to $10.35. Hewlett sued HP in Delaware Chancery Court because the state regulates proxy fights and other governance issues that concern companies incorporated in the state, such as HP and Compaq. He was expected to testify later Wednesday or Thursday. If the judge vindicates HP, the HP and Compaq are prepared to begin officially working together May 7. --- On the Net: hp.com compaq.com Opposition site: votenohpcompaq.com By BRIAN BERGSTEIN AP Business Writer Copyright 2002 Associated Press, All rights reserved -0- APO Priority=r APO Category=1700 (PROFILE (CO:Hewlett Packard Co; TS:HWP; IG:CPR;) (CO:Deutsche Bank AG; TS:DB;)