CPQ fights cynicism in workforce

US MONOPOLY WATCHDOG the Federal Trade Commission (FTC), is casting its beady eyes over the proposed acquisition of Compaq by Hewlett Packard.

The move, not unexpected, came together with a 120 page SEC filing which goes in great detail into the history of the proposed takeover.

According to the document, the deal was two years in the making - a point we've asked questions about before, given Compaq's decision this year to cede its Alpha technology to Intel.

Carly Fiorina, HP's CEO, has hit out at "lazy reporters" for fanning the flames of the past by suggesting that Messrs Hewlett and Packard, sons of Messrs Packard and Hewlett, have anything to do with the present.

According to a story on Cnet, Fiorina said: "And frankly, I get frustrated when I see lazy reporting on complicated issues. It is far easier to dream up a feud that doesn't exist than to research complex, far-reaching, industry-changing business concepts."

And an internal note from Michael Capellas, CEO of Q, to his staff, clarified his stance on the takeover.

This is what he said on the 9th of November:

"To: Compaq Global Team
From: Michael Capellas
Subject: Merger

There has been a lot of news swirling around our proposed merger with HP this week and a lot of speculation about what it means for the future. I don't want to minimize the significance of these events. But they do not change our belief that this is a powerful combination that will create a stronger market and technology leader.

Let there be no doubt that we remain committed to the merger and the success of the new HP, and we will work hard to win the confidence and the votes of both companies' shareholders. It is the right thing to do for our company and for our customers, partners, shareholders and employees. That is why the Compaq board voted unanimously on Wednesday to reaffirm its support for the merger. The HP board, with the exception of board member Walter Hewlett, also made a strong statement of its continued "enthusiastic support" for the combination.

The next big milestone in the merger process is the filing of a joint merger proxy/prospectus with the U.S. Securities and Exchange Commission, which will happen shortly. It is a lengthy document that contains details about the merger and other information shareholders need to make an informed decision about how to vote their shares. Once the SEC reviews the proxy we will mail it to shareholders and schedule the special meeting at which they will vote. We expect that meeting to take place sometime in the first quarter of 2002.

As important as the merger is, we have an equally important objective in the short term. That is to deliver a solid performance in Q4. There's nothing we can do today that will say more about our strength and our passion for winning than to exceed our Q4 performance targets. As we said when we reported Q3 earnings, we expect revenue of $7.6 to 7.8 billion and a loss of three cents a share in Q4. The market remains difficult, but I believe we can do better.

One reason for my confidence is the tremendous support of our customers. Earlier this week, I spoke to about 3,000 IT executives and 150 CIOs at Gartner Symposium in France, and met with key customers in Paris. I was pleased with the feedback I received, not only about the merger but also about opportunities to do more business. The best indication is the number of significant customer wins we've had since we announced the merger. In the past two months, we've won more than $2 billion in business, and these are just the wins that we've been able to talk about publicly.

I know that we're asking a lot of you. The current economic and business environment is hard enough; the merger and the uncertainty that many of you feel about the future make it even tougher. But it's time for us to rally around our customers, compete aggressively in the market and execute, execute, execute. This we know how to do. Thank you for all your hard work on behalf of our customers and for your commitment to Compaq's success. Michael

And this filing contains a message saying there is some "cynicism" in the workforce, as well as answering questions about the size of the firm's PC commodity holdings.

This filing has some details about how the two companies are or will be integrated.