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To: TigerPaw who wrote (59230)	5/3/2002 10:17:28 PM
From: puborectalis	Read Replies (1) \| Respond to of 77400

May 1, 2002 HP + Compaq = pool party Size doesn't matter when the pool water gets colder. That's the new bumper sticker slapped on the back of Walter Hewlett's car -- he of the fighting Hewletts in the HP+Compaq merger feud with Carly "McCoy" Fiorina. Hewlett's "Hatfield" to Fiorina's McCoy quite honestly was a refreshing change from the Bored of Directors at most public companies, which routinely rubber-stamp themselves stock options, board fees and other malarkey as puppets of the CEO. As the stock market begins to believe (perhaps prematurely) that the merger will probably happen, despite Walter's little-engine-that-could efforts, he finds himself no longer a director. Apparently, an independent board member isn't welcome at HP. The early results of the shareholder vote shows only a few percentage points in favor of the merger, making Hewlett's allegations about Fiorina sweet talking shareholder Deutsche Bank notable. A Delaware judge rules on that this week. Beyond the politics and posing, the real question surrounding HP and Compaq is its rank-and-file. With about half of investors against the deal, we think many HP workers don't like the deal much better. More important, the larger picture seems to have been absent from the spittle fest. PCs fragment into new platforms: PDAs, cell phones, video game devices, TVs. You have more chips in your car than your PC. So putting HP and Compaq together only increases the number of mouths to feed, not the harvest. Twenty years ago a slew of mainframe computer makers merged. Can you think of one of them now? Name just one. Unisys? What the heck do they do? DEC (what's that stand for again)? Compaq acquired Digital a few years ago. Wang? Chung? Mainframe mergers had to do with shrinking market share in their core markets, an admission of slowing growth and changing market forces. The 1+1=1 strategy. If we buy you and fire half your workers and you fire half of ours then we'll be OK. Dilbert would be so lucky. Talk is of laying off 24,000 people if the HP+Compaq merger goes through, according to comments made by Compaq's CFO. That figure is higher than others released. The firing should be fairly easy from the Gulf Stream as Fiorina and management head off to a day spa to de-stress. It's the run on bumper sticks that worries us, slapped on the back of the newly wedded as they exit the HP and Compaq lots: Size doesn't matter when the pool water gets colder.