So if HP-Compaq merger is approved?

By : |February 6, 2002 0

Now that a date has been set for HP shareholders to vote on the company’s
merger proposal, the likelihood of the merger’s approval will probably start to
emerge in the weeks ahead.

Despite a vigorous campaign, Walter Hewlett’s passion will not likely be
enough to sway HP’s big institutional investors to vote down the deal,
regardless of how they feel about the merger or Fiorina’s ability to integrate
two such vast and vastly different corporate cultures.



Money managers rarely go out on a limb. It’s the adage "No one gets
fired for going with management’s recommendation" that will cause many fund
manages to play it safe and follow Fiorina down a high-risk path.

In the end, Hewlett will control about 25-30 per cent of the shares and
another 10 per cent of the shares will vote against the merger. But enough of
Wall Street’s institutional investors will go with management to swing the vote
Carly’s way. And with two consecutive quarters of small but larger-than-expected
profits, the investors now have enough of an argument to support the merger.

Even if Fiorina gets the merger approved, she will come out of this with
second-degree burns and an HP workforce demoralized by the battle and the
massive lay offs that are promised in the wake of the merger.

Most signs continue to point towards the new HP losing market share on many
fronts and conventional wisdom dictates that for the next two years product and
marketing strategies will be chaotic as product groups from both companies will
fight for the survival of their projects, technologies and products.

Fiorina may win the shareholders battle. But she may find out it will be a
pyres victory at best.

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