HP Board, Hewlett Continue War Of Words


The Hewlett-Packard board and dissident director Walter Hewlett continued to exchange public barbs over the proposed merger of HP and Compaq Computer.

In response to a "Dear Walter" letter filed by the HP board with the Securities and Exchange Commission earlier in the week, Hewlett shot back in a filing of his own on Wednesday, saying, "The board's letter is a careful construct of fine lines and half truths."

Moreover, he countered, "nothing in the Board's letter will distract Hewlett-Packard stockholders from focusing on the real issue, nor change this bad transaction into a good one."

In the HP board's filing, the directors said, "We know you to be an independent thinker and an experienced board member who knows very well what your fiduciary duties are, to vote as a director in the best interest of HP shareholders. We assumed that you were upholding those duties when you willingly voted in favor of the merger as a director."

The HP board reasserted its position that its other members were blindsided by Hewlett's decision to oppose the merger as a shareholder. "Contrary to your public assertions otherwise, neither the board nor management were informed how you would vote your shares until one-half hour before your public announcement on Nov. 6," the HP board said in its SEC filing.

Hewlett and his financial advisors and HP management are now taking their respective cases to institutional shareholders.

The final proxy statement from HP regarding the merger is expected by the end of the month and a shareholder vote could come as early as next month. Hewlett and the foundation he controls, as well as the Packard Foundation, have said they will vote their combined 18 percent of HP's outstanding shares against the deal.

Meanwhile, the channel is growing weary of the ongoing soap opera.

"As this deal drags on and on, it creates a lot of confusion in the market, and I just wish it would end one way or the other," said Todd Barrett, networking sales manager at CPU Sales and Service, a Waltham, Mass.-based solution provider.