HP Chief Presses for Compaq Merger
In a crucial, direct appeal to Wall Street, Hewlett-Packard Co. chief Carly Fiorina told analysts Wednesday that the $22 billion purchase of Compaq Computer Corp. is vital for the future and asked them to ignore the daily attacks by dissident director Walter Hewlett.
With several large investors on record as being against the deal and the March 19 shareholder vote fast approaching, Fiorina opened a daylong meeting with analysts in New York by sticking to the themes she has sounded since the deal was announced Sept. 3.
Fiorina explained how she believes Compaq will let HP offer more end-to-end packages to corporate customers, and she detailed the projected financial merits of the deal. In particular, she said, Compaq strengthens HP’s hand in personal computers, Windows-based servers, data storage and high-tech services.
``Should we confine ourselves to growth in existing categories where we already are the market leader?″ Fiorina said.
Before playing a video with pro-merger testimonials from big customers, Fiorina slammed Hewlett and fellow heir David W. Packard, who sponsored independent polls that revealed widespread employee opposition to the merger at two HP sites.
She said both men are trying to mislead investors ``because they cannot win this campaign on the substance.″
``Don’t be distracted by the so-called `focus and execute’ plan,″ Fiorina said, referring to the alternate strategy Hewlett proposes. ``It is not a plan _ it is a press release.″
The meeting, which was broadcast over the Internet, also featured presentations from other top HP executives. Chief financial officer Bob Wayman said HP’s pro forma earnings per share in 2003 could be $1.51 with Compaq, $1.35 without.
Hewlett made a big pitch of his own Wednesday, filing a 48-page report with the Securities and Exchange Commission reiterating his position that HP is overpaying for Compaq and that integrating the companies is too risky. He also ran full-page newspaper ads.
Several analysts gave the deal a 50-50 chance of going through and said the key development will be the report expected in the next week from Institutional Shareholder Services. The Maryland-based proxy firm advises investors how to vote and in some cases actually votes for them.
``It’s not a clear case yet to the investment community on who could win,″ said Ari Topper, an analyst with Merger Insight. ``It could go either way.″
Andrew Neff of Bear Stearns also said the vote appears too close to call but said his ``best guess″ is that the acquisition will be approved because shareholders historically tend to support what management wants.
In midday trading on the New York Stock Exchange, HP shares rose 23 cents to $20.24, and Compaq stock was up 22 cents, or 2 percent, to $10.62.
AP Business Writer Alan Clendenning in New York contributed to this report.
On the Net:
Pro-merger site http://www.votethehpway.com
Anti-merger site http://www.votenohpcompaq.com