HP Claims Victory in Shareholder Vote

CUPERTINO, Calif. — After all the pleading, backbiting and endless
campaigning, the critical shareholder voting to determine the fate of the proposed $22-billion merger between Hewlett-Packard and Compaq Computer Corp. got underway Tuesday.

But with no official tally due out for weeks, both sides were quickly claiming victory.

“Based on a preliminary estimate of shareowner proxies by its proxy solicitor, it
believes it has received sufficient votes to approve HP’s merger with Compaq,” the Palo Alto, Calif.-based company said in a prepared statement.

It did, however, acknowledge that this is not an official vote. At a press conference, HP CEO Carly Fiorina declined to give details about the margin of victory except to say it was “slim but sufficient.”

Meanwhile, HP board member Walter Hewlett – son of company co-founder William Hewlett and the most vocal opponent of the merger – also expressed his optimism about the outcome of the vote.

“The fact that this is a close race shows the power that stockholders have when they
decide to make their voices heard by management and the board,” Hewlett said in his prepared remarks.

When asked about what she learned from the 7-month proxy contest (one of the most expensive in history), Fiorina said she learned she loved the company and “to what length I will go to fight for it.”

“After the ground is cooled, I hope to put this behind us and find common ground,” she told reporters.

During his press conference, Hewlett expressed his determination to stay a part of the company, but refused to concede the vote.

“The shareholders have spoken, it’s just a matter of time to find out which way the’ve chosen,” Hewlett said. “I can’t get insinde their (HP management) heads. I don’t know why they are saying the’ve won already.”

Hewlett also declined to speculate on his future as a board member for HP.

Only a simple majority of votes is required to approve or defeat the plan that
brings together the second- and third-largest computer makers in the
nation (behind Dell) .

To jubilant supporters and amid standing ovations here at a crowded, yet civil, Flint Center, Hewlett made his pitch to stop the HP/Compaq marriage directly to his fellow shareholders.

“During the process, what we’ve discovered is that people care about H-P. It
makes it unique as one of the best American companies. My spirited debate
about the issue shows that H-P is not a relic,” Hewlett said.

During the special meeting, Fiorina introduced three Inspectors of
Election from IVS Associates. The third-party firm, known for tabulating
and certifying proxies, took custody of all the proxies and ballots
turned in at the meeting and began tabulating and certifying the green
and white cards.

As of the Jan. 28 deadline to be a shareholder of record, there were 1,949,477,350 shares outstanding.

“There have always been people that have tried to do something bold and have been criticized for it. But if we look back on this merger, we will see that it was a decisive and shiny moment for H-P,” Fiorina said as part of her final pitch to investors.

Fiorina, who reiterated that the merger would result in 15,000 job cuts, was also greeted with applause. The job cuts would likely come 6-9 months after the merger is completed.

But even before the voting started, both sides were already claiming victory.

Sources close to the Walter Hewlett camp Monday reported a majority
of HP and Agilent Technologies stockholding employees had voted against the merger.

But by that time, four big retirement funds — Florida State Board of
Administration, Pennsylvania Public School Employees Retirement System,
State Teachers Retirement System of Ohio and the Wisconsin Investment
Board — had already stated their intent to vote in favor of the merger.

Several analysts predicted it would be large institutions and not
individual shareholders who would decide the fate of the merger.

Since the merger was announced on September 3, 2001, opponents and
proponents combined have spent upwards of $100 million in aggressive
campaigning including phone calls, mailers, and even a private plane on
standby just in case Hewlett needed to talk to investors.

However gauging the temperature of the shareholders and tracking the
voting trend in the last five months had been difficult.

Some 22 percent of the votes had been publicly voiced though
opponents to the merger, including a large block made up of Hewlett,
David Packard, the William R. Hewlett Revocable Trust and its trustees.
Other large groups like The New York public pension fund and California
Public Employees’ Retirement System (CalPERS), Brandes Investment and
Bank of America had also come out against the merger.

Proponents were showing a mere 8 percent of shareholders behind their
cause, but those who favored the merger included heavyweights like the
Federal Communications Commission, the European Union, Banc One
Investment Advisors and Intel . An additional 10 percent more were counted on with the blessing of Institutional
Shareholder Services
, which advised nearly 1,000 clients including
fund companies on corporate issues to support HP and Compaq.

Compaq shareowners are expected to approve the merger proposal Wednesday.

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