-Caveat Lector- (I used to work for HP as an r&d engineer in Loveland, CO, and agree with Walter Hewlett. I met Bill Hewlett when he visited back in 1980. He played penny-ante poker with the managers. I think the CIA is in on this takeover because HP does not work on defence contracts because it would mean massive layoffs which is not the HP way. Fiorina will be fired eventually but not without a big payoff, which is what she is banking on... I had better not say anymore. Except that she is almost certainly CIA, not that that should be a surprise. The CIA already said they were looking for new businesses in Silicon Valley. Big business and they have deep pockets. I hear they can print money, even without Greenspan. Sssh! --SW)
------- Forwarded message follows ------- Date sent: Wed, 27 Mar 2002 16:23:38 +0000 From: robalini <[EMAIL PROTECTED]> Subject: Konformist: The New HP Way To: [EMAIL PROTECTED] Send reply to: [EMAIL PROTECTED] Please send as far and wide as possible. Thanks, Robert Sterling Editor, The Konformist http://www.konformist.com Victory Claimed on Merger Hewlett-Packard Says Shareholders Backed Compaq Deal By Ariana Eunjung Cha Washington Post Staff Writer Wednesday, March 20, 2002; Page A01 CUPERTINO, Calif., March 19 -- Hewlett-Packard Co. chief executive Carly Fiorina declared victory today in her quest to win shareholder approval of a merger with Compaq Computer Co., capping an extraordinarily contentious battle over the future of the company. Fiorina said a "slim but sufficient" margin of shareholders had voted to approve her company's $25 billion purchase of Compaq, based on a preliminary count. But a key opponent of the deal, Walter Hewlett, son of one of Hewlett-Packard's founders and a company director, was not ready to concede defeat. After weeks of balloting, in which shareholders could change their votes, "it's simply impossible to determine the outcome at this time," Hewlett said. The close vote followed fierce campaigning by both sides that elevated what might have been a routine corporate dispute into a public referendum on the biggest high-tech merger ever. Almost daily, the two camps made their case in press briefings, advertisements and personal appeals to shareholders. The end came today at a special shareholders meeting in an auditorium near Hewlett-Packard's headquarters. Supporters and opponents showed up early and were greeted by partisans waving handmade signs. The meeting itself seemed more a political pep rally than corporate gathering as Hewlett drew enthusiastic applause from the audience. Fiorina, meanwhile, was peppered with tough questions about her plans for the future, an indication of the challenge she faces as she tries to bring together factions should the merger be finalized, management experts said. Neither Fiorina nor Hewlett's team would comment on the details of the preliminary count, but one source familiar with the tallying said the winning margin may turn out to be as low as half a percentage point. Fiorina said the company appeared to receive the support of most institutional shareholders who were not affiliated with the Hewlett and Packard families and their trusts. Hewlett has said his side received most of the votes from individual shareholders who held stock in their names. An independent counting firm, IVS Associates of Newark, Del., took possession of truckloads of ballots today and will spend several weeks hand-inspecting each one before officially declaring the winner. The shareholder vote is the final hurdle for the merger, which has already received the blessing of regulators in the United States and Europe. Wall Street's reaction appeared to side with Hewlett-Packard's assertion that it had won. The company's stock fell 45 cents, to $18.80, while Compaq shares jumped 78 cents, to $11.14, further closing the gap on the premium that HP is supposed to pay for Compaq shares if the merger goes through. Compaq shareholders vote on the deal Wednesday. The battle over the merger pitted the sons of company founders David Packard and William Hewlett against Fiorina, who is one of the most prominent female executives in the United States. Of the two sons, Walter Hewlett was the more visible. When he took the stage with Fiorina at today's shareholder meeting, it was their first public appearance together since the battle began. The two treated each other with civility, if not warmth. Both clapped mechanically when the other spoke. Fiorina said that she continues to have high regard for the Hewlett and Packard families and that they will always have an important role in the company: "We are proud to bear your name and will work hard to make you proud." Hewlett complimented the professional way in which Fiorina handled the meeting. The merger would blend the storied Silicon Valley giant founded in a garage with the young and feisty Texas-based personal computer powerhouse. Fiorina campaigned on the idea that HP needed Compaq to take on the likes of tech giant International Business Machines Corp. The new company would jump to the No. 1 spot in a number of markets, including printing, imaging and personal computers. "It appears that shareholders today have made a decision not only to embrace change but to lead it," Fiorina said. But Hewlett had argued that HP stands a better chance of succeeding on its own, without having to take on Compaq's weaknesses. Assuming the vote goes her way, the hard part for Fiorina would then follow. The shareholder vote can be considered a referendum on her leadership, one that has left her in a weakened position, said Charles Elsen, a professor of corporate governance at the University of Delaware. "The fact that about half your shareholders think you're making a terrible mistake is, to say the least, highly problematic. With this small of a margin, that's not a victory in my view," Elsen said. Jeffrey Sonnenfeld, professor at the Yale University School of Management, said it is possible that Fiorina will eventually be forced to leave HP as a result of the bitter shareholder fight despite a victory on the merger. "She'll have a hugely demoralized workforce, and a CEO's legitimacy is grounded in the support and respect of her people," he said. When Fiorina took over HP in 1999, during the height of the dot-com era, analysts saw her as just what the old-fashioned company needed to shake up things. But when she tried to do that, she was criticized for it. Employees resented her decision to lay off thousands of workers, saying the family-oriented company's founders would never have stood for it, and they were rankled by her high-profile, celebrity-seeking style. The company would be hit hard financially in the initial months of the merger, taking a charge of $900 million to $1.4 billion to cover the cost of reorganizing the combined company. But her biggest obstacle may be regaining the confidence of employees and customers who have come to side with Hewlett. At this morning's shareholder meeting, Fiorina drew boos when she talked about plans to lay off 15,000 employees if the merger goes through, to eliminate duplicate operations. One HP worker even came up to the microphone and vowed to quit if the merger is finalized. She "took the pounding like a 250-pound heavyweight boxer," said Larry Fowler, a 55-year-old engineer who owns a few hundred HP shares and decided at the meeting to vote for the merger. In contrast, most in the audience cheered Hewlett for his feel-good speech about how HP represents the "best in American corporate culture" and that the "HP way" is more than a "piece of trivia relevant to the HP family." Pat McGurn, a vice president at Rockville-based Institutional Shareholder Services, said Fiorina has little room for error given how hard-fought the merger battle has been. "They could have a momentary sip of champagne but then they have to go back to the office and work on the deal because any celebratory downtime could mess up their execution," he said. Indeed, Ted Waitt and Michael Dell, the heads of competitors Gateway Inc. and Dell Computer Corp., have said in recent days that the uncertainty surrounding the merger has helped them steal some customers. Fiorina said after the shareholders meeting that she and Compaq chief executive Michael Capellas spent the whole day Sunday planning the integration of the two companies. Launch activities are ready to start as soon as the vote is officially certified, which she expected would be in two to four weeks. Comparing her fight to that of other pioneers whose ideas were greeted with skepticism and criticism, Fiorina said she believes that "we will look back and see this as a decisive and shining moment for HP." As for Hewlett, he said he hopes to remain active in the company decision-making process as a director. And showing that there were no hard feelings, at least on his part, he poked fun at HP's criticism of him by saying that after he merger issue is resolved, "I will resume my life as an academic and musician." � 2002 The Washington Post Company ***** Losing the HP Way Carly Fiorina may have triumphed over Walter Hewlett, but the effort to save her company's share price came at a cost: Silicon Valley's soul. - - - - - - - - - - - - By Jeff Goodell March 22, 2002 | So the proxy battle of the century appears to be over. Carly Fiorina won. Walter Hewlett lost. The jazzy, boardroom- smart CEO of Hewlett-Packard will get her wish, and the hoary old Silicon Valley legend will gobble up Compaq, forming a $20 billion monster that will do battle with Dell and IBM. It will be years before anyone can judge whether this is a brilliant move or just a mindless "What the hell else are we gonna do?" attempt to boost HP's sagging stock price. I tend to think it'll be the latter, but then, I'm not an investment banker or HP executive who stands to make millions off the deal if it goes through. I do, however, have strong feelings about what was at stake in this battle. I grew up about two blocks from HP's Cupertino campus, which was sited in the middle of an old apricot orchard, and my uncle worked for the company for over 20 years. I heard stories of Friday beer bashes and free donuts and coffee; everyone I knew who worked there seemed to love their work -- they couldn't say "HP" without throwing their shoulders back a little bit and standing a little straighter. As a kid, I used to ride my Stingray bicycle around in the HP parking lot, attracted by the mystery and wonder of what was going on behind those tinted-glass windows. It was not only the cool technology HP built that wowed me, but the sense that it was helping to build a better world. For an entire generation of Silicon Valley entrepreneurs, including Steve Jobs, who has often said that HP was the inspiration for the freewheeling corporate culture at Apple, HP represented the dream of a company that was not just fun to work for and treated its employees well, but which was built upon a foundation of loyalty, trust and community service. It was the embodiment of ethical capitalism. Indeed, it's hard not to contrast HP's proxy battle with the sorry unraveling of Enron, a company whose most deeply held ethical commitment seemed to be making sure the strippers were tipped generously before they left the party. During the proxy fight, Fiorina's intelligence and commitment to pushing ahead with the $20 billion deal were impressive. Nevertheless, I was rooting for Hewlett all the way. In his day job, Hewlett runs the William & Flora Hewlett Foundation, the 19th largest foundation in the U.S., and has served on the HP board since 1987. It wasn't that I was convinced that his vision for HP was shrewder than Fiorina's (basically, Hewlett argued that HP should avoid the cutthroat PC business and focus on printers and related hardware). I mostly just liked the fact that a Silicon Valley native was speaking out against the reigning ethic of more, bigger, faster. Naturally, the pro-merger spin machine dismissed him as an "an academic and musician" (he has a Ph.D. in music and plays 10 instruments) who knows nothing about how to run a business. Oddly, the real battleground in this deal was not the spreadsheets of the 21st century, but the Palo Alto garage where the company was founded in 1939. The garage was, as HP's pro-merger ads tirelessly reminded readers, the birthplace of Silicon Valley. To her credit, Fiorina has always understood the mythic power of HP's past. Not long after her arrival in 1999, HP started its "Back to the Garage" ad campaign -- a patently absurd notion for a company with 96,000 workers all over the world. But paying homage to the gods of the garage gave Fiorina some much-needed street cred, while also providing cover while she slashed jobs and reorganized the company. During the proxy fight, Fiorina employed a similar strategy. Her pro- merger team brilliantly neutered Hewlett's emotional appeal by co- opting the iconography of the past -- for weeks leading up to the vote, you couldn't open the business pages without seeing pictures of Bill Hewlett and David Packard in their shirtsleeves, looking like primal geeks from the 1940s. Fiorina argued that her grow-fast-or-die strategy reflected the founders' true entrepreneurial spirit -- pro- merger ads quoted David Packard: "To remain static is to lose ground." The whole subtext of this battle, ostensibly about HP's future, in fact turned on one key question: "What would Bill and Dave think?" Casting herself as the true heir of the HP Way was a tricky strategy for Fiorina to pull off -- not only because Bill and Dave were manly men, deer hunters, engineers and mountain climbers, while Fiorina, who has a Yorkshire terrier named Pooh Bear, is all corporate polish and saleswoman savvy. It was also tricky because the past doesn't usually carry a whole lot of weight in the high-tech industry -- you don't see Microsoft running many ads with a teenage Bill Gates and Paul Allen huddled around an old Altair. And it's especially difficult to argue that you're channeling the true spirit of the company founders while you're simultaneously dissing the co-founder's son. Hewlett, of course, rarely spoke about the past. He didn't have to. He personified it. Indeed, if Hewlett were simply a rich 57-year-old academic with a few million shares of HP stock, this deal would have been a slam-dunk. As it was, he used his moral authority, as well as his millions, to lobby shareholders, to ask tough questions, and most important, to force controversial issues into public debate -- such as the proposal made at an HP board meeting for Fiorina and Compaq CEO Michael Capellas to receive a $115 million windfall if the merger went through. In effect, he acted as HP's corporate conscience. And now that he's lost the battle, it's unlikely he'll stick around for long. His spot on the newly merged HP-Compaq board will undoubtedly be taken by more of a team player, and pretty soon there will be no one left at HP with a sentimental connection to anything but the bottom line. If nothing else, Hewlett's campaign demonstrated one reason why start- ups have such an advantage -- if a company is only 6 months old, there are no old-timers like Walter Hewlett around to cause trouble. When it comes to inventing the future, the past can be a real drag. But that doesn't mean it isn't worth remembering. - - - - - - - - - - - - About the writer Jeff Goodell's most recent book is "Sunnyvale," a memoir about growing up in Silicon Valley. If you are interested in a free subscription to The Konformist Newswire, please visit: http://www.eGroups.com/list/konformist Or, e-mail [EMAIL PROTECTED] with the subject: "I NEED 2 KONFORM!!!" (Okay, you can use something else, but it's a kool catch phrase.) Visit the Klub Konformist at Yahoo!: http://clubs.yahoo.com/clubs/klubkonformist Your use of Yahoo! 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