Users Uneasy as Vote Draws Near

Surveys question HP-Compaq combination.

Before shareholders walk into their respective meetings later this month to vote for or against Hewlett-Packard Co.s proposed buyout of Compaq Computer Corp., they must first navigate the swelling river of surveys, polls, claims and counterclaims by proponents and opponents of the deal.

The challenge is daunting. As the shareholder votes are only weeks away, the rhetoric between HP and opponents of the deal, namely board member Walter Hewlett, is intensifying. The groups are now trading barbs in a seemingly constant stream of daily press releases, newspaper ads and speeches.

The melee is having a negative impact on IT customers who purchase products from either company, according to a new Ziff Davis Market Experts survey. ZDME, a group within Ziff Davis Media Inc., publisher of eWEEK, based the survey on more than 1,000 respondents.

One of the primary causes of concern, according to the survey, is the perceived fault of HP Chairwoman Carly Fiorina and Compaq Chairman Michael Capellas to explain the IT benefits and pitfalls of the proposed $25 billion buyout. According to respondents, the two chiefs have spent more energy trying to convince Wall Street of the financial benefits.

"What I havent heard is what the plan for these two organizations is should the merger go through," said Bob Cancilla, director of corporate systems planning for Republic Indemnity Co. of America Inc., in Encino, Calif.

"Weve got HP equipment on our Unix side and Compaq equipment on our NT and Novell side, and as long as they maintain their service organizations, I dont think the merger will be a problem for us," said Brian Potts, network manager for Associated Food Stores Inc., in Salt Lake City. "But I guess you can never tell until it happens."

Neither Cancilla nor Potts participated in the survey.

The survey, which was administered via e-mail and the Web during the second and third weeks of last month, went to more than 6,000 subscribers of eWEEK, CIO Insight and Baseline and was conducted by ZDME.

One of the more telling findings in the study is that 61 percent of respondents strongly or somewhat disagree with the statement that HP and Compaq have done a good job of explaining the benefits of the merger to customers.

"This deal puts a lot of customers into play," said Aaron Goldberg, an analyst for ZDME, in New York. "Whoever does the best job of making them happy and making them comfortable will reap a lot of benefits. Its going to be dicey [for HP and Compaq]."

HP officials who reviewed the survey called it flawed.

"Its irresponsible and invalid to use information gathered by e-mail and a Web-based survey," said company spokeswoman Andrea Bass, from HP offices in Grenoble, France. "You cant know for sure who filled out the surveys. It could well have been our rivals."

However, according to Goldberg, the e-mail survey was mailed to only specific, named individuals, who were provided a detailed URL.

The survey was then active for only four days. Furthermore, according to Goldberg, those chosen for the sample were not random readers but actual end users who agreed to answer questions about their IT operations and opinions.

Bass also rejected the surveys contention that HP had failed to address customers concerns about the merger. "Carly and our executives have spent a lot of time addressing customers needs," she said.

Officials at Compaq also questioned the methodology of the ZDME survey. "But it does address some of the limitations we have faced," said Compaq spokesman Arch Currid, in Houston. "As part of the review process, weve been unable to make public a lot of information customers have been asking for, unfortunately. The good news is were getting near the end of that process and should soon be able to address questions customers have been asking, such as product portfolios, road maps, etc."

HP last week added credibility to a more publicly discussed survey of HP employees, which Fiorina has referenced in analyst briefings and press conferences. The survey, known internally as the Pulse Survey, was deemed "valid" by Chicago-based International Survey Research Corp. last week.

"The sample HP had drawn and calculated was not only representative in terms of size but also in terms of the structure of the organization," said Leo Brajkovich, global director of organizational development practice at ISR.

The key to the validity of the survey, which is administered monthly with third-party survey software tools, Brajkovich said, was HPs attention to detail in extending the sample to every region in its global organization. "In order to speak for a global organization, the sample has to be global," he said.

By contrast, an HP employee survey conducted by Field Research Corp. for David Packard last month focused only on employees in Oregon and Idaho. That survey claimed that 63 percent of employees opposed the merger.

According to Brajkovich, HPs sample indicates that 66 percent of employees are "somewhat or very supportive" of the deal. He also added that software survey tools are becoming commonplace among corporations and are valid ways of gathering research.

HP will hold its stockholders vote March 19 at a meeting in Cupertino, Calif., followed a day later by a Compaq stockholder vote in Houston. At the meetings, the companies—whose boards of directors have already approved the deal—must secure the support of more than 50 percent of their respective investors to proceed with the deal.

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