Hewlett blasts HP-Compaq integration
Published: 24 Apr 2002 07:32 BST
Opening arguments began in Delaware on Tuesday in the HP versus Hewlett trial, with the lawyer for dissident shareholder Walter Hewlett displaying a host of internal emails contending that the proposed merger of Hewlett-Packard and Compaq Computer was having integration troubles.
Stephen Neal, of the law firm Cooley Godward, cited emails from the HP-Compaq "value creation team" showing the companies would be unable to hit targets outlined in an S4 document filed with the Securities and Exchange Commission filed in February.
Neal also cited emails from Compaq chief financial officer Jeff Clarke and chief executive Michael Capellas indicating that initial plans from the business units were low. Feedback to one email from Clarke showed the companies had a "mile to go." In addition, Neal cited personal journal entries from Capellas questioning whether the companies could meet their goals.
But HP attorney Steven Schatz said Hewlett, son of the company's co-founder, presented only half the picture, arguing that business units in the value creation team intentionally set low goals. He added that Hewlett's claim had no basis and that further testimony would prove him wrong.
HP chief executive Carly Fiorina, chief financial officer Robert Wayman and Walter Hewlett were in attendance at the court.
The proceedings kicked off a three-day trial that could help decide the fate of the $20bn merger. Hewlett filed a lawsuit asking the Delaware Chancery Court to overturn the vote by HP shareholders to approve the deal.
Leading up to the trial, both HP and Hewlett have been mum about their respective strategies. The parties have exchanged requests and have agreed to limit disclosure to the public but allow federal regulators to examine the documents.
The trial is the latest effort by Hewlett to derail the deal. Hewlett is arguing that HP improperly influenced Deutsche Bank to vote its shares for the deal. He is asking the court to throw out Deutsche Bank's votes or seek a new vote as an alternative.
HP said last week that its tally shows the company received the required votes from shareholders, but Hewlett is asking for a recount and may challenge some ballots.
All the wrangling has delayed HP's integration plans. HP had hoped to close the Compaq deal on 1 April, but the company said a recount has pushed things out until early May. Nevertheless, the companies have said they are forging ahead with integration plans.
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