Fiorina Emerges To Defend HP-Compaq Merger


Hewlett-Packard CEO Carly Fiorina defended her merger plan and claimed the mantle of HP's founders Tuesday in her first major public appearance since founding families united against the $24.4 billion deal to buy Compaq Computer.

Addressing the Consumer Electronics Show in Las Vegas, Fiorina used a demonstration of new digital camera and printing technology as a stepping stone to the broader point that Hewlett-Packard must change to survive.

Fiorina acknowledged the crowd's apparent interest in the merger as she showed off HP's new cameras and printers.

"You probably were expecting to hear a stump speech about merger votes or proxies or family legacies," she said.

Fiorina has kept a low profile since a Packard family foundation decided on Dec. 7 to oppose the merger, joining the other founding family members and trusts.

But the battle between her chief opponent, HP board member Walter Hewlett, and the rest of HP's board erupted into an ugly public brawl Monday as the board said Hewlett had been inaccurate and inappropriate in explaining how he voted for the deal as a board member and now opposed it.

Hewlett responded that the board had written a letter that was a "careful construct of fine lines and half truths."

Fiorina ignored that fight in her remarks.

"To remain static is to lose ground," Fiorina said, quoting Dave Packard, the co-founder and father of some of the merger's opponents.

Packard and partner Bill Hewlett had acquired companies as well as innovating, and fought back against skeptics, she said.

"In the days ahead we're going to draw upon the same courage, the same determination, the same aspiration that drove our founders," Fiorina said.

Showing off how HP's digital cameras and printers worked together, Fiorina said the merger would harness the technology portfolios of HP and Compaq.

Critics, including Hewlett, say buying Compaq would dilute the value of the imaging franchise and saddle HP with a huge PC division when it needed to develop its high-end machines.

Fiorina said she had a response for the critics who said the merger would not work: "I say, you don't know the people of the new HP."

The shareholder vote on what is potentially the largest merger in computer history has not been scheduled but is not expected before late February.

Some members of the audience at the keynote were wearing red pro-merger buttons, and Fiorina also surprised the crowd by giving away dozens of digital cameras to randomly selected audience members.

HP shares on Tuesday lost 24 cents, to close at $22.78 on the New York Stock Exchange, while Compaq lost 39 cents to end at $11.29.

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