SAN JOSE, Calif. - With a stern rebuke in a newspaper ad and a scathing report to shareholders, sons of Hewlett-Packard Co.'s late founders hit hard Wednesday at the company's $23.8 billion plan to acquire Compaq Computer Corp.
The bickering has been going on for months, as Hewlett and Packard heirs and foundations with 18 percent of HP stock have pledged to vote against the deal. Meanwhile, only one major HP investor, with 1 percent of the stock, is openly in support.
But the attacks have gotten harsher lately, with HP trying to discredit chief opponent Walter Hewlett as a "musician and academic," not a businessman.
On Wednesday, the son of co-founder David Packard took issue with HP's frequent use of a Packard quote - "to remain static is to lose ground" - in its arguments that buying Compaq is essential for survival.
In a full-page ad in The Wall Street Journal headed "There You Go Again!" heir David W. Packard wrote that HP chief Carly Fiorina is misleading people by claiming her "disruptive" merger plan is the only possible choice for HP other than keeping the status quo.
Packard, who was on HP's board from 1987 to 1999, said he has gotten hundreds of letters from employees opposing the merger.
"HP thrived for 60 years without a single colossal merger remotely approaching the scale of Compaq. Was HP 'losing ground' all those years?" Packard wrote. "You recall another one of my father's famous sayings: 'More companies die of indigestion than starvation.'
"There is now a real danger that HP will die of a broken heart."
Hours later, Walter Hewlett gave the Securities and Exchange Commission a detailed report disputing HP's recent projections that acquiring Compaq will generate $5 to $9 per share in additional shareholder value. Citing research from his financial advisers, Hewlett claimed the deal actually would wipe out $4.50 a share.
Hewlett, an HP board member and the eldest son of co-founder William Hewlett, has filed several other critical reports with the SEC as the basis for his effort to persuade shareholders to vote the deal down.
Optimism or due caution?
But this salvo needled the company further, saying that HP management is refusing to acknowledge how risky the deal would be and that its "optimism about integration reflects the triumph of hope over experience."
"HP has never done anything like this before, and both HP and Compaq management have a history of being over-optimistic," he said, partly referring to Fiorina's run of lowering targets for Wall Street in 2000 and 2001.
HP declined to comment on the ad but blasted Hewlett's filing, saying it "merely recycles prior assertions in an attempt to breathe life into arguments that have been previously discredited."
