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

To: Oeconomicus who wrote (724)	6/4/2002 2:10:13 PM
From: Dave B	Read Replies (2) \| Respond to of 4345

R.D., So, who was right about the amount of post-merger lost revenue? Carly or Walter? Could've sworn she said 5% while he said 10%, but I haven't looked it up. Oh, well. Dan Niles says the stock could hit the mid-20s within a year or two, so merging will be great for shareholders. Walter should be thankful, right? Only if Niles predictions are correct (and HWP wouldn't have been even higher, which we'll never know). As you pointed out in 2001... Message 16133864 So, will Carly survive this? CNBC's recap today of her history of reaffirming guidance and then warning shortly thereafter was quite telling. Only problem with canning her is that she probably has a parachute that makes her signing bonus look modest. Dave

To: Oeconomicus who wrote (724)	6/4/2002 2:28:03 PM
From: Dave B	Respond to of 4345

R.D., Here's one article I found re: your question... (and I knew you were being sarcastic ;-) ) Hewlett Fires Next Salvo in HP Bid Battle. Africa News Service, Jan 25, 2002 p1008025u0407 Full Text Jan 25, 2002 SAN FRANCISCO Hewlett-Packard (HP) shareholders could lose 4-5 a share if the company wins approval for its controversial 24,1bn bid for Compaq Computer, according to a report prepared by financial advisors to Walter Hewlett. The report, prepared by Friedman Fleischer & Lowe (FFL), is the latest volley in an increasingly hard-fought battle between HP and Hewlett, the dissident HP director spearheading opposition to the proposed transaction. Hewlett said the transaction was a "bet-the-company move" that was not appropriate for HP because of the "substantial and unacceptable" integration risk. The new document responds to HP's claim that the estimated 2,5bn in synergies from the merger would add $5-9 to share value. The FFL report argues that while HP's cost savings might be achieved, the company's presentation of the value of the merger is "misleading and incomplete". "We think the focus on 2004 cost savings is a real distraction from the main strategic issues," said one advisor to Hewlett. Hewlett's main argument has been that the transaction would dilute HP's profitable printing business by increasing its exposure to the highly competitive low-margin PC business. The Hewlett camp said HP's analysis did not take into account the share dilution that would result from acquiring Compaq. FFL also estimated that HP would have to spend about $1,9bn in severance payments and retention bonuses in order to achieve the cost savings. HP has not yet provided an estimate of expected costs to achieve synergies. As in the past, FFL disputed several of HP's financial assumptions about the deal. HP has said it expects the deal to produce at least $2,5bn in savings, with a 5% loss of combined revenues. HP has also estimated that for every dollar in lost revenue, the company would lose 12c in operating profit. However, Hewlett's advisors countered that a more realistic case, which they said was based on precedent transactions and research analyst estimates, was that cost savings would be 2,2bn, with a 10% revenue loss. FFL also reiterated its argument that HP would lose 25c in operating profit for every dollar in lost revenue. The advisors said HP, Compaq and comparable computer groups that suffered revenue decline in 2001 lost an average of 42c in operating profit for every dollar in lost revenue. HP responded by arguing the FFL report "recycles prior assertions in an attempt to breathe life into arguments that have previously been discredited". It defended its economic case for the transaction. Bob Wayman, HP's chief financial officer, said this week that the transaction would result in a 13% accretion in the value of HP shares in fiscal 2003, with a larger accretion expected in 2004. by Scott Morrison Copyright Business Day. Distributed by All Africa Global Media(AllAfrica.com)