WILMINGTON, Del. – Hewlett-Packard Co. Chairman and CEO Carly Fiorina this morning was recalled to the witness stand briefly to answer questions regarding the companys meeting with Deutsche Bank and its subsidiary, Deutsche Asset Management. The meeting took place on the morning that shareholders were to vote on HPs proposed $19 billion buyout of Compaq Computer Corp.
Attorneys for Walter Hewlett, a board member and son of an HP co-founder, armed with a transcript from that March 19 phone meeting, again questioned Fiorina about whether she tried to use HPs business relationship with the bank to convince bank officials to vote their 17 million shares in support of HPs of proposed acquisition of Compaq.
In the transcript, Fiorina is quoted as saying, "We very, very much appreciate your willingness to listen to us this morning… it is of great importance to our ongoing relationship. We would very much like to have your support here." When asked by HP attorney Steven Schatz whether she meant to imply that Deutsches Bank business relationship with HP would be harmed if Asset Management voted against the deal, Fiorina said, "absolutely not," and that she didnt believe Deutsche officials took the comments as a threat.
This issue of whether HP improperly pressured Deutsche officials into voting for the deal is a key point in Hewletts lawsuit against HP.
Both Fiorina and HP CFO Bob Wayman testified Tuesday and Wednesday that throughout the month leading up to the March 19 vote, they assumed Deutsche bank was going to vote all their shares in support of the deal.
When they found out the day before the shareholder vote that that wasnt the case, they admitted they were angry and concerned and felt they needed to have the chance to make one last pitch to Deutsche officials. However, they denied threatening or coercing the bank.
In testimony yesterday, Fiornia became visibly agitated on the witness stand as she rebuffed allegations that she misled investors by understating potential losses that could result from the Compaq deal. Fiorina angrily denied assertions she concealed potentially damaging financial reports from shareholders and touted unrealistic optimistic projections of financial benefits.
Just as he had done in testimony Tuesday, Hewlett attorney Stephen Neal repeatedly grilled the chief executive about internal financial reports that predicted larger revenue losses for 2003 than HP projected in publicly issued statements.
Fiorina repeatedly countered that the reports by her "Value Capture Team" offered only a "snapshot" of where business units were at that time and failed to take into account other financial information and economic data.
Fiorina grew increasingly tense as Neal suggested that the unreleased internal reports compiled in February and March offered a far more accurate portrayal of the true costs of the merger, including projecting losses $2 billion higher than HP publicly had forecasted.
The chief executives anger flared briefly when Neal asked why the internal reports were not made available to the board of directors.
"Youre accusing the CEO of a publicly traded company of lying," she shot back.
"Im just asking you questions," Neal responded.
Fiorina again asserted the reports provided an incomplete picture and lacked the more expansive view HP offered in its reports to investors.
Hewlett claims that HP executives misled shareholders by not fully disclosing to them the risks of HPs acquisition of Compaq, and that the Palo Alto, Calif., company improperly pressured Deutsche Bank and its subsidiary, Deutsche Asset Management, to vote for the deal.
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