20 March 2002 Initial estimates indicate that a slim majority of Hewlett-Packard (HP) shareholders supported the company’s €24 billion merger with Compaq Computer in yesterday’s crucial vote, according to a statement by HP’s board of directors.
The official result of the contest may not be known for several weeks. But the HP board stuck its neck out last night and went public with exit-poll findings of its proxy solicitor.
If true, the result represents a substantial vindication for Carleton Fiorina, the CEO of HP, who has endured five months of criticism from opponents to the deal, led by dissident HP board member Walter Hewlett, son of HP co-founder William Hewlett. If not, however, the board’s premature victory claim will be a source of embarrassment to HP for years to come.
The claim followed a two-hour shareholder meeting in which Fiorina was booed and Hewlett received a standing ovation as they made last-minute appeals over the fate of what would be the computer industry’s biggest merger.
Most investors posted their votes before the meeting, but many began lining up at dawn outside an auditorium in Cupertino, California, to cast ballots in person and watch Fiorina field questions.
One, Gary Masching, who works for HP spinoff Agilent Technologies, wore a green cape – in honour of Walter Hewlett’s green proxy cards – and tapped out a march on a drum while shareholders lined up. He told the Associated Press (AP) news agency that he decided to oppose the deal when HP derided Hewlett as a “musician and academic” without the business acumen to question the Compaq deal.
Another, Mike Beman, 24, of nearby Los Altos, opposed the deal and came to the meeting to be part of Silicon Valley history. “The thing that swayed me was that the Hewlett and Packard foundations are both against it,” he told AP. “I really respect their opinions over that of the (HP) board.”
Hewlett spoke briefly from a microphone on the floor of the auditorium, thanking HP’s employees and stockholders for listening to his arguments against the deal.
“For decades, HP has represented the best of what an American company can be,” Hewlett said, drawing applause from the audience of more than 1,000 shareholders — and Fiorina. No matter how the vote goes, he said, “I think that this has made us a stronger company.”
When he concluded, he got a standing ovation. Even Fiorina applauded from her podium on the stage.
Fiorina faced intense questioning from the audience. When one man asked her about independent polls that found employees at three HP sites opposed the Compaq acquisition by a ratio of two to one, she responded that internal surveys gave her confidence that most workers company-wide actually support the deal. Many people booed.
Hours after the stormy meeting was concluded, the HP CEO called the margin of victory “slim but sufficient”, but would not provide further details. But Hewlett said the vote remained “too close to call”.
Fiorina went on: “We believe that with this endorsement from our shareowners, HP has an historic opportunity to lead in a rapidly evolving industry and build upon our proud history of innovation and invention.
“The intense debate throughout this contest has raised important issues and prepared us even more fully for the integration and marketplace challenges that lie ahead. It’s now time for all of us – those who supported the merger and those who opposed it – to pull together for the benefit of the company.”
Compaq shareholders are expected to back the deal in a vote today.