Most HP shareholders are anti-merger: Walter Hewlett

SAN FRANCISCO: Walter Hewlett, the leading opponent of Hewlett-Packard Co's

plan to buy Compaq Computer Corp said on Tuesday that most shareholders were

with him -- a day after HP's management made a similar claim in the bitter fight

over the $22 billion deal.

"I believe I represent the views of a majority of stockholders. The

market does not like this transaction," said Hewlett, a dissident director

and son of HP co-founder Bill Hewlett, who argues HP would trade part of its

best business -- printers -- for its worst -- personal computers -- by buying

Compaq.

Shareholders from HP and Compaq vote on March 19 and 20 on the plan, which

has spawned a virtual trench warfare battle as the two sides fight for each

investor's vote. Analysts say the results are a toss up so far.

HP says the deal, which would be the biggest in computer history, would

create a one-stop technology shopping center for customers and let it take on

International Business Machines Corp. Management also expects to make a profit

in its personal computer business by increasing the scale and by adopting the

direct sales model Compaq uses -- in emulation of No. 1 PC maker Dell Computer

Corp.

Walter Hewlett said the "merger of equals" between HP and Compaq,

each with roughly $40 billion in annual sales, would create a power struggle and

was too ambitious, aiming to win in razor thin commodity business and high-end

at the same time.

Expects Fiorina to leave if merger bid fails



"HP cannot out-Dell Dell and out-IBM IBM, at the same time, and make no
mistake, that is what this merger would require," he said in a conference

call.

Hewlett also said that only chief executive Carly Fiorina would leave HP if

shareholders rejected the merger. "I am convinced there will be no

disruptions in the day to day operations of Hewlett-Packard when the merger is

voted down. On the other hand the merger would be infinitely more disruptive

than a simple change of CEO," he said.

HP, however, raised the specter of many more resignations.

"What specific assurances can you give HP shareowners that HP's board --

which is fully committed to the Compaq transaction -- will not leave when

members have stated they are not decided on the issue?" HP asked in a list

of questions it released ahead of the Walter Hewlett call.

HP board member Phil Condit said in another conference call on Monday he

expected that most top-20 HP shareholders backed management. He and fellow board

member Sam Ginn said they were not sure whether they would step down if the

merger failed, but Ginn said he would line up a replacement if he did leave.