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Technology Stocks : Hewlett-Packard (HPQ) -- Ignore unavailable to you. Want to Upgrade?

To: PCSS who wrote (523)	5/20/2002 11:15:38 PM
From: PCSS	Read Replies (1) \| Respond to of 4345

PART 4 OF 5 On December 7, however, they received a near-devastating blow when the board came out against the deal. It was part of a pattern of over- optimism evident within the HP team throughout the six months. If HP was caught flat-footed by Mr Hewlett's bombshell, it appeared to be in disarray following the Packard Foundation announcement. During that weekend, management and the group's surprisingly small communications team convened several times to figure out how to keep the deal alive. All of HP's heirs, controlling 18 per cent of the shares, were now firmly against the transaction. It is a tribute to Ms Fiorina's determination that the deal did not fall apart there and then. First, HP's management had to soothe frayed nerves at Compaq. In a leaked internal memo, Mr Capellas appeared to distance Compaq from its prospective partner, saying Compaq must be prepared to face the future as a stand-alone company if necessary. (It was the responsible thing to do, he would later say.) At the same time, Tom Perkins, a Compaq director, commented to the media that the uncertainty over the deal could be damaging to both companies if it was not cleared up quickly. Compaq was seen as sending a shot across HP's bow. But HP's board did not waver. Indeed, throughout the proxy battle, non-executive board members spoke out in Ms Fiorina's favour, enabling her to focus on getting the deal done. The debate moved quickly from issues to personalities. The company turned its sights on Mr Hewlett, launching a series of attacks aimed at damaging his credibility. While trying to claim the moral high ground, HP privately told anyone willing to listen that Mr Hewlett had opted to perform in a concert and go on a long-distance bike ride, rather than attend the critical board meetings. HP dismissed him as an 'academic and musician', and in late February started arguing he had repeatedly 'flip-flopped' about whether he had an alternative strategy that would prove more beneficial to shareholders. Mr Hewlett's camp responded with an aggressive campaign which attempted to show that the acquisition would destroy shareholder value. His team also claimed that Ms Fiorina and Mr Capellas had initially sought to reap as much as $115m between them if the deal were to close. Both companies vehemently denied the claim. Ms Fiorina's efforts to win the support of shareholders and other constituents in this bitter and public battle were handicapped not only by concerns about HP's strategy and its ability to execute it, but also by more general concerns about her management style. When Ms Fiorina arrived in the summer of 1999, she had been feted by the media. She was the first woman to run a leading Silicon Valley company, which was also the 13th largest corporation in the US. With her megawatt smile and polished demeanour, HP had a chief executive with undoubted celebrity power which was in tune with the dotcom era. Ms Fiorina evangelised at conferences and appeared in television commercials. For three consecutive years she would be number one of Fortune Magazine's Power50 females. 'I have an ability to grow businesses,' she boasted in a magazine interview just after her appointment.