HP chief claims proxy fight win
By Jon Swartz
USA Today
CUPERTINO, Calif. — Hewlett-Packard CEO Carly Fiorina claimed victory Tuesday in a proxy battle for shareholder approval of HP's $21 billion acquisition of Compaq Computer.
But merger opponents say the vote — which ended Tuesday at the HP shareholder meeting — is too close to call. An official tally will take weeks.
"We believe we have a slim but sufficient margin," Fiorina said at a press conference, after reviewing preliminary results. She refused to be more specific.
Wall Street speculated that Fiorina would not have made such a statement unless she was positive. "There's no way she's going to come out and say, `We have the votes,' unless she knows," says Mark Specker of SoundView Technology Group.
But Walter Hewlett, the HP board member who crusaded against the merger, refused to concede. "It is simply impossible to determine the outcome at this time," he said. Todd Glass, a spokesman for Hewlett, said the margin was "razor thin." Another source opposed to the merger said the difference was a scant 0.5 percent.
The merger would create an $87 billion company rivaling IBM in size and services. Fiorina says the merged company's new product lineup, management and layoff plans would be announced immediately. At least 15,000 job cuts are expected. "We're going to hit the ground running," said Fiorina, who has all but staked her career at HP on the merger.
The proxy cards of the 900,000 HP shareholders will be counted by vote-counting firm IVS Associates in Newark, Del. It says it might not know the official results for weeks. If the tally is close, both sides could file protests, triggering a recount reminiscent of the 2000 presidential election. Hewlett's camp wouldn't say whether it will ask for a recount if the official tally is in favor of the merger and is close.
For weeks, Fiorina and Compaq CEO Michael Capellas have said they had enough shareholders lined up to support the deal. Tuesday, Fiorina indicated that a "decisive" majority of institutional shareholders, who own 57 percent of HP shares, favored it. For HP to declare victory, it surely needed the support of Capital Research & Management, HP's largest institutional investor with a 3.45 percent stake, and State Street, which owns 2.5 percent. Unlike other big shareholders, neither revealed their votes. HP needs a majority of votes cast to win. The Hewlett and Packard families, and their foundations, voted their 18 percent block of shares against the deal.
Compaq shareholders are expected to easily approve the merger today. Both sides have been keeping tallies of shareholder sentiment.
More than 1,000 HP shareholders packed the HP meeting, fittingly held in a theater. Outside, deal opponents carried signs such as "Merger Today, Chapter 11 Tomorrow." The crowd gave Hewlett a standing ovation. It jeered Fiorina when she said most employees supported a merger.
