Key HP Shareholder Adviser Waiting Before Issuing Judgment On Merger

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A key adviser to Hewlett-Packard institutional shareholders is sticking to its guns and waiting until it sees a final proxy statement before deciding whether to support or oppose HP's proposed merger with Compaq Computer.

"We are talking to people now [Walter Hewlett and HP management, but we certainly haven't concluded those discussions or even come close to doing so," said Ram Kumar, assistant director of U. S. research at Institutional Shareholder Services (ISS), Rockville, Md. "[The families' opposition is a factor that we are aware of and will look at, but we're more interested in why the family is opposing the deal than the mere fact that they are opposed. We will make a judgment based on the merits of the arguments."

ISS is an advisory to an undisclosed number of HP institutional shareholders. Kumar said ISS has sole discretion to vote some institutional shares and merely acts in an advisory role to others. He wouldn't disclose the number of shares ISS could potentially influence.

Kumar added that ISS would issue a recommendation to its clients about two weeks before the actual shareholder vote, which has yet to be scheduled. "We won't issue a recommendation until our clients actually have ballots in their hands and there is a definitive proxy out there," he said.

The final proxy statement is not expected to be issued until next month, with a shareholder vote coming no sooner than the end of February.

Meanwhile, the war of words between HP management and dissident shareholders Walter Hewlett and David Packard, sons of the HP co-founders, showed no signs of letting up. Both HP and Hewlett continued to exchange barbs in Securities and Exchange Commission filings, while Packard jumped into the fray with a full-page newspaper ad blasting HP Chairman and CEO Carly Fiorina. "There you go again!" blared the ad. "Ms. Fiorina, your recent advertisement misappropriates Dave Packard's words 'to remain static is to lose ground.'"

Packard charged, "My father's quote has no relevance to your argument."

Fiorina could not be reached for comment.

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