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Fiorina claims victory in HP-Compaq merger vote

Posted: 21 Mar 2002 ?? ?Print Version ?Bookmark and Share

Keywords:processor? proxy card? Hewlett-Packard? Compaq? company merger?

Hewlett-Packard Co. chief executive Carly Fiorina declared victory by a "slim, but sufficient margin" in the shareholder vote Tuesday (March 19) on HP's proposed merger with Compaq Computer Corp., while dissident HP board member Walter Hewlett said the vote was "too close to call."

Their divergent views came in back-to-back press conferences after a special shareholders meeting that was punctuated by emotional comments against the merger and in support of Walter Hewlett.

Shareholders who packed the Flint Center here revealed the depth of feeling on both sides of the merger issue that has divided the company. The two-hour meeting did little to change the minds of attendees, according to interviews conducted after the event.

"Based on a preliminary count, we believe we have sufficient votes to approve the merger," said Fiorina at a press conference about 40 minutes after the meeting closed. "A decisive majority of the shares not affiliated with the Hewlett and Packard families have voted for the acquisition. This is a preliminary count based on our proxy solicitor," she said.

"I don't know why the company is making the statements they are," countered Walter Hewlett at a separate press conference at a nearby hotel. "As near as we can tell it's a razor-thin margin. I think it's simply impossible to tell the outcome at this time."

IVS Associates will announce a final vote of the company's nearly two billion outstanding shares in two to four weeks, said Fiorina. Once announced, either side can contest the results and examine the proxy statements. The estimated 900,000 shareholders were allowed to vote multiple times, with only the last vote counting.

Tense moment

In what some attendees called the most "tense moment" of the morning shareholders meeting, the audience erupted into boos, groans and hoots when Fiorina said that HP's polls found a majority of its employees favor the merger. Fiorina talked over protesters to insist that the results reflected HP people worldwide. They might not have reflected the feelings of those at the meeting in Cupertino, however, where the audience included a large percentage of former and retired employees.

The brunt of the meeting consisted of a sometimes contentious 90-minute Q&A session with Fiorina. One engineer said he joined HP as a production worker, earned his engineering degree and now has eight patents and two pending, but would not likely stay if the company merged with Compaq.

"I oppose this merger. I don't have trust for the management team pushing it," he said, citing what he called the company's poorly-handled layoffs last August. "If this merger goes through, I do not think I will be an employee much longer and I regret that because I love this company very much," he said to applause and whoops from the audience, many of whom wore green to show support for Walter Hewlett's green proxy cards.

At the shareholder meeting, Walter Hewlett spoke only briefly before the Q&A session to deliver prepared comments, largely thanking shareholders and employees for their support. The audience responded with a standing ovation. "I was very taken by the audience's support," he said later.

Smooth to a fault

Several shareholders gave Fiorina high points for making her case articulately in front of strong opposition, but others said her polish has also been an irritant for some HP employees.

"She is very smooth, Walter is very unpolished and non-professional, while she is the ultimate marketer," said Doug Onstad, a former employee in HP's finance department, who voted for the merger. "HP people culturally get turned off by too much smoothness. I think she represents a real culture clash for the company.

"There needs to be consolidation in the computer industry," Onstad added. "It's a high-risk move but there's a chance it could be a home run."

"My lab is more for the merger than some," said Rex Petersen, a member of HP's technical staff. Peterson, who works on the IA-64 processor at HP's facilities in Fort Collins, Colo., was in Cupertino to help debug the upcoming McKinley processor.

"I got the impression a few more people in HP are in favor of the merger than against it," he said. "Some are reluctantly for it, some are against it but say they will line up with it if it goes through."

Petersen said he has gained confidence in the deal from the upbeat mood of a friend who is now part of the HP-Compaq integration team, and from HP's experience in cooperating successfully with Intel Corp. on the McKinley processor.

But others expressed deep reservations.

"There are so many issues and they are all heartfelt," said Donald L. Hammond, a retired employee who became the second executive to run HP Labs. The merger poses "a question of the cultural risks," he said while standing in line to get into the shareholders meeting before 8 a.m. in California.

"I think the most important thing HP did was not to become a $44 billion company but to weave the fabric of a corporate culture that can be a positive influence on society," Hammond said. "I'm here to understand what the risks are and understand what Carly is saying about culture and values going forward."

? Rick Merritt

EE Times

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