In her first public address after garnering the backing of a key investment group, Hewlett-Packard Co. Chairman Carly Fiorina said that despite winning an important battle, its too early to claim victory in the proxy fight over HPs bid to buy Compaq Computer Corp.
Fiorinas comments at the Morgan Stanley Semiconductor & Systems Conference in Laguna Niguel, Calif., were made only a few hours after the influential Institutional Shareholder Services issued a report urging its more than 700 corporate clients to support the merger, a judgment Fiorina said reinforced HPs arguments for pursuing the deal.
"Its gratifying when an independent group … comes to the conclusion that the strategy is right, the economics are right, the integration planning is right, the governance process of the board is right, and that this represents the right answer for the creation of shareholder value," Fiorina said of the ISS decision.
But the chief executive added that, while winning ISS support was critical, the fight over the controversial merger will continue until HP shareholders vote on March 19 and Compaq stockowners vote on March 20.
"I cant predict how many votes will be swayed by it [the ISS report], nor do I think we should say this is over now," the chief executive said. "We have two weeks to go, and our plans to meet with investors havent been changed by this recommendation."
In order to close the proposed $22 billion buyout announced in September, HP and Compaq must garner the support of more than 50 percent of their respective stockholders. While Compaqs investors are expected to back the deal, the outlook is far from certain for HP.
Walter Hewlett, an HP board member and son of one of the companys late co-founders, is leading a highly publicized lobbying effort to persuade shareholders to reject the merger, contending itll undermine the companys market leading imaging and printing business as well as corporate profits.
While the ISS report rejected Hewletts alternative "focus and execute" strategy, the group praised the dissident board members lobbying efforts.
"Mr. Hewletts campaign almost certainly deserves some portion of the credit for managements attention to integration planning," the ISS report said.
Those comments drew a sharp rebuke from Fiorina.
"Frankly, I have been spending a lot of time on integration planning, but I could be spending more if I wasnt in a proxy battle," she said.
If anything positive has come from Hewletts opposition, Fiorina said, its that it helped unify HP and Compaq staffers working on the merger by giving them a "common enemy."
"I think having common opposition has brought the teams of HP and Compaq closer together," she said.
For the most part, Fiorina used her appearance at the Morgan Stanley conference to once again outline her arguments in favor of the merger.
"We have believed since the day we announced this deal that this is a compelling opportunity for the shareowners of these two companies," she said, contending itll improve HPs market position in several key business segments--such as PCs, storage, servers and services--and eventually boost profitability.
"This is the single best alternative for the creation of shareowner value," she said. "It is not the only, but clearly the best."