|
Hewlett: HP best going solo
|
 |
February 13, 2002: 7:05 p.m. ET
Detractor says first-quarter HP results negate need for Compaq merger.
|
NEW YORK (CNN/Money) - Walter Hewlett, who is trying to stop Hewlett-Packard Co.'s $25 billion takeover of Compaq Computer Corp., said HP's strong first-quarter results Wednesday confirm the company doesn't need Compaq.
HP's earnings also spotlight a significant divergence between it and Compaq. Hewlett-Packard's guidance for fiscal 2002 of $1.04 a share has not changed since it announced the Compaq takeover last September. However, Compaq's 2002 estimates have dropped 59 percent to 27 cents, Hewlett said.
Hewlett reiterated his claim that the HP-Compaq deal was the consequence of a phone call from Compaq CEO Michael Capellas to Fiorina just a few months before the deal was announced in September 2001.
The HP dissident also took out a full-page advertisement in the Wall Street Journal against the merger. The ad, signed by Hewlett, states that great product overlap would result from the HP-Compaq transaction. The merger will produce a 10 percent loss in revenue for 2003, the ad says.
Hewlett, son of Hewlett-Packard Co. co-founder William Hewlett, has launched a proxy fight against the combination, claiming that large computing mergers consistently fail.
|
|
|
HP says Hewlett has gone too far in criticism of its CEO, Carly Fiorina (above). | |
Hewlett-Packard reported Wednesday a fiscal first-quarter profit that beat recently raised expectations and showed improvement over the prior quarter.
Meanwhile, six HP directors countered Hewlett's attacks against the HP- Compaq transaction.
In a letter to Hewlett, the HP directors said they were extremely disappointed with how he has opposed the Compaq takeover. The directors maintained that the deal for Compaq is the result of a two-and-a-half year process and expressed their continued support for HP's embattled CEO Carly Fiorina.
The verbal volleying is the latest between the two camps as the merger vote nears. Shareholders of Hewlett-Packard Co. (HWP: up $0.21 to $20.98, Research, Estimates) will vote March 19 on the combination and Compaq (CPQ: up $0.28 to $11.40, Research, Estimates) shareholders will vote the next day.
A Compaq merger will allow HP to fill in gaps, the HP directors said Wednesday. Houston-based Compaq brings market leadership in key areas such as Windows servers, high-performance computing and enterprise storage.
HP also shouldn't walk away from the PC business, the directors said. The Palo Alto, Calif.-based company already has outsourced its PC manufacturing business. The directors hope to combine HP's retail business with Compaq's commercial model, which then could grow faster together rather than separately.
Hewlett's plans for HP include scaling back its personal computer operations, focusing the company more on the profitable printing and imaging business, and expanding its services business, which would include possibly buying smaller companies in the software and consulting industry.
HP directors support Carly
The directors also took issue with Hewlett's claims that CEO Fiorina and HP management have made strategic decisions with little input from the board.
"You are misrepresenting our thorough process and the intensive effort we undertook to evaluate numerous alternative," the directors said. "You have insulted our personal commitment and fiduciary responsibility."
The HP directors also expressed their support for Fiorina, who has weathered considerable opposition since the HP-Compaq merger was announced in September.
Hewlett has stated that if the merger fails, he expects Fiorina to step down.
"We want to state clearly that your comments about our CEO do not represent the opinion of your fellow board members," the directors said. "We have never wavered in our confidence in Carly and our support for her." 
|
|
|
|
|
|
|
