HP Says Merger Approved; Hewlett Disagrees

CUPERTINO, Calif.—Hewlett-Packard Co. Chairman and CEO Carly Fiorina said today that it appears the companys merger with Compaq Computer Corp. has been approved by shareholders. However, board member Walter Hewlett, the most vocal critic of the deal, disagreed.

"The results of todays vote are too close to call," Hewlett told reporters. "In a proxy contest this close, where stockholders are changing their votes right up until the closing of the polls, it is simply impossible to determine the outcome at this time."

Fiorina, speaking to reporters about 30 minutes after the shareholders completed their voting, said an initial review of proxy votes indicates that the Palo Alto company has received more than the 50 percent of shareholder votes needed to approve the $22 billion deal.

"We believe that, based on a preliminary estimate of shareowner proxies submitted, that we have received sufficient votes to approve Hewlett-Packards merger with Compaq Computer Corp.," Fiorina said, adding that this was not an official tally of all votes.

"We are gratified that HP shareholders recognized the compelling strategic and economic benefits of the merger and that a decisive majority of shares not affiliated with the Hewlett and Packard families and foundations appear to have been voted in favor of this transaction.

"We believe that with this endorsement from our shareholders, HP has an historic opportunity to lead in a rapidly evolving industry and build upon our proud history of innovation and invention."

But Hewlett, son of one of the companys cofounders, was not ready to concede defeat, saying in a press conference after Fiorina spoke that the vote could still go either way and that he expected "razor-thin margins" in the final tally.

He said he wont contest the vote if it goes against his wishes, and added that either way, it was important that shareholders were heard.

"While we are optimistic about the outcome of todays vote, we believe that regardless of the final result, today is a clear victory, not just for HP stockholders, but for all stockholders," Hewlett said. "Together, weve demonstrated that accountability is not a platitude and that stockholders, the true owners of a company, can and should have a say in the decisions that are made by management and the board."

Several thousand shareholders gathered at the Flint Center here this morning to vote on a deal that has been the focus of contentious debate, primarily between Fiorina and Hewlett, son of one of the companys cofounders.

Hewlett argued that it would damage the companys core businesses, such as printers, and expose it too much to the troubled PC market.

Fiorina and other HP executives, as well as officials with Houston-based Compaq, said the merged company would instantly become number one in most industry markets, from PCs to storage to printers.

Most of the shareholders here today appeared to be current and former HP employees, with the bulk of them arguing against the deal. They worried about jobs and the companys future.

But industry observers said it would be the institutional shareholders who would make the difference, and analysts expected them to vote in favor of the merger.

Compaq shareholders vote on the deal Wednesday in Houston. They are expected to approve the merger.

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