Filed by Hewlett-Packard Company Pursuant to Rule 425
Under the Securities Act of 1933
And Deemed Filed Pursuant to Rule 14a-12
Under the Securities Exchange Act of 1934
Subject Company: Compaq Computer Corporation
Commission File No.: 1-9026
This filing relates to a planned merger (the "Merger") between Hewlett-Packard
Company ("HP") and Compaq Computer Corporation ("Compaq") pursuant to the terms
of an Agreement and Plan of Reorganization, dated as of September 4, 2001 (the
"Merger Agreement"), by and among HP, Heloise Merger Corporation and Compaq. The
Merger Agreement is on file with the Securities and Exchange Commission as an
exhibit to the Current Report on Form 8-K, as amended, filed by Hewlett-Packard
Company on September 4, 2001, and is incorporated by reference into this filing.
The following is a message from Iain M. Morris, HP's President, Embedded
Personal Systems, regarding recent media reports relating to the future of HP's
PC business. Mr. Morris delivered the message to employees in HP's Embedded
Personal Systems Organization and HP's Business Customer Organization.
Dear All,
I would like to wish each of you a happy and productive 2002.
I'm writing to you to set the record straight regarding recent press reports on
the future of our PC business. You may have seen an article this Monday in USA
Today which claims that Carly "warned that, should it [the merger] fail, HP's
vaunted printer and imaging businesses would be damaged and HP might have to
shut down its personal computer division."
This is not the first time the press has zeroed in on the notion that we should
exit the PC business. Rather than suggesting we exit PCs, Carly was explaining
the importance of the merger -- in the context of a range of strategic
alternatives -- as a way to fix our PC business. She was also responding to
Walter Hewlett's assertion that PCs are a challenging business (yet he fails to
offer any thoughts on how to improve it).
According to the full transcript of the interview, what Carly said was: "It [the
merger] allows us to fix our PC business. We can't get out of our PC business.
If I didn't care about laying off people, I could just shut it down. But if I
shut it down, I'd have to lay off a lot more than 15,000 people across two
companies over several years. So, we have to fix our PC business. And fixing our
PC business requires volume and distribution capability."
To further clarify her remarks, the 15,000 figure has been included in our
filings with the U.S. Securities and Exchange Commission. It refers to the
estimated number of employee reductions of the COMBINED HP and Compaq workforce,
which will total about 150,000 people. It does not specifically refer to the PC
business. The reductions are expected to occur during the first two years after
the merger closes and will be achieved through a combination of targeted job
reductions and attrition.
It is important for you to know that HP remains committed to the PC business. By
merging with Compaq, we believe the cost-savings from the anticipated synergies
and economies of scale will lower the cost structure of our combined PC business
and have a positive impact on margins. We will also be able to leverage the
significant progress Compaq has made developing its direct distribution
capabilities to create a more flexible distribution model for the combined
company and help us address this important industry issue.
By combining HP's strength in the consumer PC business and Compaq's strength in
the commercial PC business, we will create a more balanced industry leader. We
also intend to create sustainable value in our PC and other personal systems
businesses by innovating across emerging categories and delivering a new
generation of connected access and embedded devices.
The merger also will provide important benefits to HP's imaging and printing
franchise (also mentioned in the USA Today article). By improving operating
margins in our other business segments, we expect to increase our investment in
core IPS research and development and new IPS initiatives such as digital
imaging and digital publishing -- investments that are crucial to maintaining
our leadership in the IPS business. According to Carly: "Imaging and Printing is
not a cash cow. It is a growth engine that has to be invested in if we're to
capture the real growth opportunities in Imaging and Printing going forward."
Our vision is to become a premier provider of the end-to-end solutions our
customers now demand. That requires us to be a leader in imaging AND printing
AND computing AND services. It requires us to be a leader in both the enterprise
AND the consumer space. PCs remain an important part of the end-to-end solutions
we provide.
In closing, let me thank all of you again for staying focused on the business at
hand, and for continuing to help HP emerge an even stronger competitor when the
economy rebounds. Here's to delighting our customers, delivering results and
beating the competition.
Thank you,
Iain
FORWARD-LOOKING STATEMENTS
This document contains forward-looking statements that involve risks,
uncertainties and assumptions. If any of these risks or uncertainties
materializes or any of these assumptions proves incorrect, the results of HP and
its consolidated subsidiaries could differ materially from those expressed or
implied by such forward-looking statements.
All statements other than statements of historical fact are statements that
could be deemed forward-looking statements, including any projections of
earnings, revenues, synergies, accretion or other financial items; any
statements of the plans, strategies, and objectives of management for future
operations, including the execution of integration and restructuring plans and
the anticipated timing of filings, approvals and closings relating to the Merger
or other planned acquisitions; any statements concerning proposed new products,
services, developments or industry rankings; any statements regarding future
economic conditions or performance; any statements of belief and any statements
of assumptions underlying any of the foregoing.
The risks, uncertainties and assumptions referred to above include the ability
of HP to retain and motivate key employees; the timely development, production
and acceptance of products and services and their feature sets; the challenge of
managing asset levels, including inventory; the flow of products into
third-party distribution channels; the difficulty of keeping expense growth at
modest levels while increasing revenues; the challenges of integration and
restructuring associated with the Merger or other planned acquisitions and the
challenges of achieving anticipated synergies; the possibility that the Merger
or other planned acquisitions may not close or that HP, Compaq or other parties
to planned acquisitions may be required to modify some aspects of the
acquisition transactions in order to obtain regulatory approvals; the assumption
of maintaining revenues on a combined company basis following the close of the
Merger or other planned acquisitions; and other risks that are described from
time to time in HP's Securities and Exchange Commission reports, including but
not limited to the annual report on Form 10-K for the year ended October 31,
2000 and HP's amended registration statement on Form S-4 filed on January 14,
2002.
HP assumes no obligation and does not intend to update these forward-looking
statements.
ADDITIONAL INFORMATION ABOUT THE MERGER AND WHERE TO FIND IT
On January 14, 2002, HP filed an amended registration statement with the SEC
containing an amended preliminary joint proxy statement/prospectus regarding the
Merger. Investors and security holders of HP and Compaq are urged to read the
amended preliminary joint proxy statement/prospectus filed with the SEC on
January 14, 2002 and the definitive joint proxy statement/prospectus when it
becomes available and any other relevant materials filed by HP or Compaq with
the SEC because they contain, or will contain, important information about HP,
Compaq and the Merger. The definitive joint proxy statement/prospectus will be
sent to the security holders of HP and Compaq seeking their approval of the
proposed transaction. The amended preliminary joint proxy statement/prospectus
filed with the SEC on January 14, 2002, the definitive joint proxy
statement/prospectus and other relevant materials (when they become available),
and any other documents filed by HP or Compaq with the SEC, may be obtained free
of charge at the SEC's web site at www.sec.gov. In addition, investors and
security holders may obtain free copies of the documents filed with the SEC by
HP by contacting HP Investor Relations, 3000 Hanover Street, Palo Alto,
California 94304, 650-857-1501. Investors and security holders may obtain free
copies of the documents filed with the SEC by Compaq by contacting Compaq
Investor Relations, P.O. Box 692000, Houston, Texas 77269-2000, 800-433-2391.
Investors and security holders are urged to read the definitive joint proxy
statement/prospectus and the other relevant materials when they become available
before making any voting or investment decision with respect to the Merger.
HP, Carleton S. Fiorina, HP's Chairman of the Board and Chief Executive Officer,
Robert P. Wayman, HP's Executive Vice President, Finance and Administration and
Chief Financial Officer, and certain of HP's other executive officers and
directors may be deemed to be participants in the solicitation of proxies from
the shareowners of HP and Compaq in favor of the Merger. The other executive
officers and directors of HP who may be participants in the solicitation of
proxies in connection with the Merger have not been determined as of the date of
this filing. A description of the interests of Ms. Fiorina, Mr. Wayman and HP's
other executive officers and directors in HP is set forth in the proxy statement
for HP's 2001 Annual Meeting of Shareowners, which was filed with the SEC on
January 25, 2001. Investors and security holders may obtain more detailed
information regarding the direct and indirect interests of Ms. Fiorina, Mr.
Wayman and HP's other executive officers and directors in the Merger by reading
the amended preliminary joint proxy statement/prospectus filed with the SEC on
January 14, 2002 and the definitive joint proxy statement/prospectus when it
becomes available.
Pursuant to an engagement letter dated July 25, 2001, HP retained Goldman, Sachs
& Co. ("Goldman Sachs") to act as its financial advisor in connection with the
Merger. In connection with the engagement of Goldman Sachs as financial advisor,
HP anticipates that employees of Goldman Sachs may communicate in person, by
telephone or otherwise with certain institutions, brokers or other persons who
are shareowners for the purpose of assisting in the solicitation of proxies in
favor of the Merger. Although Goldman Sachs does not admit that it or any of its
directors, officers, employees or affiliates is a "participant," as defined in
Schedule 14A under the Securities and Exchange Act of 1934, as amended, or that
Schedule 14A requires the disclosure of certain information concerning them in
connection with the Merger, Gene Sykes (Managing Director), Matthew L'Heureux
(Managing Director), George Lee (Vice President) and Jean Manas (Vice
President), in each case of Goldman Sachs, may assist HP in the solicitation of
proxies in favor of the Merger.
Compaq and Michael D. Capellas, Compaq's Chairman and Chief Executive Officer,
and certain of Compaq's other executive officers and directors may be deemed to
be participants in the solicitation of proxies from the shareowners of Compaq
and HP in favor of the Merger. The other executive officers and directors of
Compaq who may be participants in the solicitation of proxies in connection with
the Merger have not been determined as of the date of this filing. A description
of the interests of Mr. Capellas and Compaq's other executive officers and
directors in Compaq is set forth in the proxy statement for Compaq's 2001 Annual
Meeting of Shareholders, which was filed with the SEC on March 12, 2001.
Investors and security holders may obtain more detailed information regarding
the direct and indirect interests of Mr. Capellas and Compaq's other executive
officers and directors in the Merger by reading the amended preliminary joint
proxy statement/prospectus filed with the SEC on January 14, 2002 and the
definitive joint proxy statement/prospectus when it becomes available.
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