HP Chief Pushes Merger on Wall St.
In a crucial, direct appeal to Wall Street, Hewlett-Packard Co. Chief Executive Carly Fiorina told analysts Wednesday that the proposed $21.7-billion purchase of Compaq Computer Corp. is vital for the company and asked them to ignore the daily attacks from dissident director Walter Hewlett.
With several major investors on record as being against the deal, and with the March 19 shareholder vote looming, Fiorina kicked off 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 why she thinks Compaq would 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, Microsoft Corp. 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 running a video with pro-merger testimonials from customers, Fiorina slammed Hewlett and the other co-founder’s son, David W. Packard, who sponsored independent polls that revealed widespread employee opposition to the merger at two HP sites.
She said both heirs 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 Chief Financial Officer Bob Wayman and other top executives. Wayman said HP’s pro forma earnings per share in 2003 could be $1.51 with Compaq or $1.35 without it.
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.
HP shares Wednesday rose 2 cents to $20.03, while Compaq fell 20 cents to $10.20, both on the New York Stock Exchange.
Compaq shares are trading 19% below the value of Hewlett-Packard’s offer, compared with 37% in November. The smaller gap indicates that some investors believe the purchase is likely to happen.
Fiorina also responded to criticism that her company won’t disclose what it plans to pay top officials if the deal goes through. Hewlett has pressed executives for weeks to release the details, and Tuesday he said Fiorina and Compaq CEO Michael Capellas together may be paid more than $115 million.
Fiorina called his statement “one of the most egregious” claims he has made. She said the packages haven’t been decided and that the combined company’s compensation committee should set the new salaries.
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Bloomberg News was used in compiling this report.
