With less than a month to go before shareholders vote on Hewlett-Packard Co.’s (HP) planned acquisition of Compaq Computer Corp., HP chief executive officer Carly Fiorina and a roster of HP’s top executives met with analysts in New York Wednesday to offer impassioned speeches and a blizzard of statistics supporting the deal.
Little new was said at the event, which included Fiorina’s now-familiar warning that if it maintains the status quo, HP will lose its leadership position in a rapidly changing industry.
“The IT industry is consolidating, and it will continue to do so,” Fiorina said during her opening remarks. “Customer demands will escalate, with or without this merger.”
Fiorina reiterated HP’s oft-stated goals for the merger, including integrating Compaq assets it lacks, such as a strong commercial direct-distribution PC. Joining with Compaq will also bolster HP’s strength in enterprise computing, according to Fiorina. The high-end Unix market is stagnating and will grow only five per cent to seven per cent going forward, she said, while the Windows NT and Linux markets grow 20 per cent to 30 per cent. “Do we sit those markets out?” she asked.
Fiorina also attacked some of Walter Hewlett’s recent comments and tactics in the proxy fight he is leading to defeat the merger. His three-pronged “focus and execute” plan for HP’s future is “not a plan, it is a press release,” Fiorina said. Statements made Tuesday by Hewlett about the post-merger HP’s executive compensation plans are both misleading and a breach of his fiduciary duties as an HP board member, she charged.
HP’s board aborted early discussions about executive compensation and postponed such discussions until after the merger’s close, Fiorina said: “We cannot disclose what has not been decided. We cannot comment on employment contracts which do not exist.”
Other HP executives, including chief financial officer Bob Wayman, HP Services president Ann Livermore and HP Computing president Duane Zitzner spoke about how the merger will improve their units’ bottom line.
Joining with Compaq will vault HP from the number seven or eight IT services organization to number three, Livermore said, a prospect which excites employees and will offer customers an alternative to IBM Corp. HP beat IBM for two major services contracts within the last several months, one with Nokia Corp. and one with PeopleSoft Inc., she said.
“Size does matter. Scale does have advantages,” Livermore said. “We will get invited to the table for more opportunities.”
Discussing HP Computing’s performance recently has been “like going to the dentist without Novocain,” Zitzner said. “We want to get this business healthy and vibrant, and we need this merger to do that, in my opinion.”
HP needs stronger storage offerings, greater scale and more cash for research and development, he said. A merged HP will have “an absolutely stellar product lineup.”
All of HP’s executives emphasized the work already completed by integration teams on product roadmaps, consolidation plans and operational alignment, details of which can’t be disclosed until after the merger closes. HP and Compaq will be ready to operate as one company on April 1, Fiorina said.
HP, in Palo Alto, Calif., is at http://www.hp.com/