management chalked up points today against Walter Hewlett, son of company co-founder William Hewlett, and his escalating campaign to stop the company’s merger with Compaq Computer Corp.
from moving forward.
In a heated response to Hewlett’s Securities and Exchange Commission filing earlier this week of an alternative business strategy in lieu of the $22 billion merger, HP’s six-member Board of Directors sent a letter to shareholders challenging Hewlett’s ability to lead the company in a more profitable direction than the carefully calibrated Compaq merger is expected to.
Today’s letter marks the fifth missive in a week sent to shareholders by either HP management or Hewlett arguing the merits and demerits of the merger deal.
“HP was not built in a day,” stated the Board. “Common sense dictates that Walter Hewlett cannot cobble together a “so called” strategic plan for HP in a day, or in a week, or in a month. Developing a strategic plan designed to create a stronger, more competitive HP that delivers increased value to shareowners takes time and a great deal of expertise.”
Hewlett has been heavily criticized in recent weeks by industry analysts and media for his slipshod approach to presenting a viable and cohesive alternative to the merger deal he has so publicly denounced. Shareholder confidence in Hewlett has been rattled by his almost comic vacillations between having a plan or not having a plan, referred to as Hewlett’s “now you see it, now you don’t” business approach.
HP Board Members suggested in their letter that Hewlett’s public grousing and personal attacks on Fiorina’s professional performance have been a deliberate attempt to mask the inadequacies of his latest business proposal.
“The fact is Walter Hewlett has never had a viable plan and he has none now,” stated the Board. “All he continues to do is say “no” to the pending Compaq merger, but he offers nothing meaningful in its place. We do not believe you can trust your investment to Walter Hewlett’s constantly changing ‘plans.’ Your investment and your money are real, Walter Hewlett’s plan is not.”
The HP Board also took shots at chronicling Hewlett’s very public changes of heart between February 6 to Feb. 20 as he announced and then denounced his strategy against the merger.
Quoted in particular is a Wall Street Journal op-ed by Holman W. Jenkins published on Feb. 6 that states: “Mr. Hewlett is a man without a plan” and encourages retail investors to “send in their proxies to save Hewlett-Packard from the Hewletts and the Packards.”
Hewlett responded to Jenkins scathing criticism by announcing publicly that he in fact had a “plan.” But by the beginning of the following week, Hewlett rescinded his “plan” and is quoted by Reuters as stating: “I want this very clearly understood, I am not presenting a plan.”
A week later Hewlett did an about-face and filed his “Focus and Execute” plan with the SEC.
But consistency aside, Hewlett and his trustees are vehement that the merger should not go through and Hewlett has been quoted as saying that the HP/Compaq merger was “hastily adopted” following a telephone conversation between Fiorina and Compaq CEO Michael Capellas.
“This is not careful planning and execution,” said Hewlett. “It is haphazard and reactive.”
Interestingly, the same words that have been flung in Hewlett’s direction by HP executives.
In the meantime, Hewlett and his camp are sticking hard and fast to their belief that by avoiding the merger and abiding by Hewlett’s plan that HP shareholders could realize a $14 to $17 increase per share and double company margins.
The HP Board believes otherwise.
“HP will continue to address the merger on its merits, with our positions supported by careful and conservative financial analysis. We ask Walter Hewlett to do the same.”