Filed by Hewlett-Packard Company Pursuant to Rule 425
Under the Securities Act of 1933
And Deemed Filed Pursuant to Rule 14a-6
Under the Securities Exchange Act of 1934
Subject Company: Compaq Computer Corporation
Commission File No.: 333-73454
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 series of quotations relating to the Merger. This series of
quotations is posted on HP's internal web site and HP's external web site,
www.VotetheHPway.com.
WHAT OTHERS HAVE TO SAY ON THE HP/COMPAQ MERGER*
Momentum
Strategic Rationale
The New HP
The Opposition
Risks of Standing Still
Value to Customers, Partners & Vendors
MOMENTUM
o Alliance Capital Management Holding L.P. "If the vote were tomorrow, we'd
vote in favor of it," Vice Chairman Lewis Sanders. He views the merger as
the best chance for H-P and Compaq to survive consolidation among makers of
PCs, servers and storage systems. The [new HP] "has a greater possibility
of accomplishing this goal than either company alone." ("Fund Manager
Alliance Capital Endorses H-P Proposal to Buy Compaq," Dow Jones Business
News, Jan. 21, 2002)
o "`A few weeks ago, you would have thought the merger was going to be called
off,' said Charles Mayer, whose Invesco Funds Group owns Hewlett-Packard
shares and manages $30 billion. `It seems the odds are back in favor that
maybe it will get done.'" ("Hewlett-Packard's Fiorina Claims Momentum in
Acquisition Fight," Cesca Antonelli, Bloomberg, Feb. 13, 2002)
o "`We think the deal is going to go through', said Bruce Raabe, chief
investment officer at Collins & Co., which favors the transaction and has
$500 million under management. `She has persuaded enough shareholders.'"
("Hewlett-Packard's Fiorina Claims Momentum in Acquisition Fight," Cesca
Antonelli, Bloomberg, Feb. 13, 2002)
o "`We supported the merger coming in today, and now we are further
convinced,' said one hedgefund manager and Compaq shareholder. `I think the
sentiment about this deal is shifting. Alliance Capital is supporting the
deal and the sell-side analysts seem to be much less negative.' The
resistance from Walter Hewlett and David Packard
----------------------------
* Permission to use quotations for inclusion in this document was neither sought
nor obtained.
should be discredited because they don't have the analytical framework to
understand the merger, the hedgefund manager said. `The fact is that the PC
industry is maturing and (Walter) Hewlett and (David) Packard are hanging
on to the collegial vision and romantic attachment to the old HP,' he said.
`That is nice, but the tide has shifted.'" ("Capellas: HP deal is a
`winning hand'", Larry Dignan, CNET News.com, Jan. 25, 2002)
o "What changed? HP has provided investors with a clearer picture of how the
companies would fit together. And HP's Feb. 4 news that it would beat its
quarterly earnings estimates has increased investor confidence in Fiorina.
Then there are Fiorina's powers of persuasion. `Each time I've heard her,
I've heard a stronger and better argument,' says Ray Hirsch, an analyst
with American Express Financial. What's more, Fiorina is winning support
from those who fear the uncertainty if she loses and steps down. Says Kevin
Rendino, a portfolio manager with Merrill Lynch: `Sometimes the devil you
know is better than the devil you don't know.'" ("Carly Fiorina: Catching
the Big Mo," Peter Burrows, BusinessWeek, Feb. 18, 2002)
o "The six top H-P shareholders control nearly 16 percent of the company -
almost as much as the 18 percent controlled by the Hewlett and Packard
family members who oppose the deal. `The institutions that still own the
stock think the deal will go through, and that it makes sense,' said Bill
DeRosa, fund manager with Badgley Phelps and Bell Inc. in Seattle, with
$1.5 billion under advisement. `What was once a 70-30 chance of getting it
done is now a 50-50 chance.' DeRosa, who has voiced opposition to the deal
and does not currently own H-P shares, says he agrees with statements by
CEO Carly Fiorina that H-P is turning the tide in its merger battle with
dissident board member Walter Hewlett." ("H-P's top holders stick with
shares," Mike Tarsala, CBS.MarketWatch.com, Feb. 15, 2002)
STRATEGIC RATIONALE
o "Hewlett-Packard and Compaq are about as perfectly complementary as it gets
in technology, starting with the CEOs. Fiorina sees the big picture;
Compaq's Michael Capellas is a crack operations type. They get along. HP
dominates printing and digital imaging. Compaq, using Dell-inspired quick
inventory turns, still manages to eke out a profit in PCs. Thanks to
Capellas' masterful fix of its Tandem acquisition, Compaq has become a
force in supercomputing, a category revitalized by Sept. 11. (Think defense
and security.)
Compaq is also sneakily strong in storage, another sweet spot. Marry HP and
Compaq, and you have a potential T. rex in the food chain of computer
imaging, printing, security and storage." ("Vote Carly," Rich Karlgaard,
Forbes.com, Jan. 28, 2002)
o In response to the comment "Gateway has got some problems today, in
particular," Rob Callander of Caldwell Asset Management said: "Yes, and
that just proves that this industry needs to consolidate. I think Walter
Hewlett worked three summers for Hewlett-Packard back in the `50s. The
Compaq and Hewlett people have analyzed every business and every product
line. So it's a very hard forecast of the $2.5 billion savings they're
talking about. I mean, I think it should go through. ... And this will be a
very, very powerful strong company." (CNNfn, The Money Gang, Jan. 25, 2002)
o "We regard today's announcement by Hewlett-Packard and Compaq as indicative
of both the short- and long-term trends in the global IT supplier
marketplace. Today's announcement marks a formal recognition that the
individual pieces of a technology solution are not enough, be that for a
consumer or an entire enterprise." ("Hewlett-Packard and Compaq Look to the
Future," Analysts: Crawford Del Prete, Michael Melenovsky, and Lee Doyle,
IDC, Sept. 2001)
o In a detailed 41-page assessment sent to its corporate clients, [IDC]
acknowledged the risks of the deal, but stated, "I.D.C. believes that H.P.
and Compaq may very well be better off together than apart." "H.P. and
Compaq are making their strategic move for the next wave -- and they are
making their move right now." ("Technology Briefing Software: Endorsement
For Hewlett Deal," Steve Lohr, The New York Times, Jan. 29, 2002,)
o "HP and Compaq -- Inevitable and Necessary" ("Hewlett-Packard and Compaq
Look to the Future," Crawford Del Prete, Michael Melenovsky, Lee Doyle,
IDC, Sept. 2001)
o "Despite Wall Street talk of synergies and cost savings, the Compaq-HP
merger is about something bigger: survival in a consolidating industry. By
acting now, these firms guarantee that they'll still be here to compete in
the post-PC world of services." ("The Compaq-HP Merger: It's About
Survival," Forrester Research, Carl D. Howe with Charles Rutstein, Charles
Homs, Heather Liddell, Sept. 4, 2001)
o Crawford Del Prete, senior vice president, IDC. "I give Carly a lot of
credit for making what I think are gutsy moves. The market doesn't like
them, but (investors) have a hard time seeing the forest for the trees," he
said. "From a long-term standpoint, she is cluing into key trends in the
hardware business: It's not about feeds and speeds, it's about being able
to pull together disparate functions, technologies, services and software
to create a solution for a customer." ("The HP fray/Analysts say Fiorina's
success tied to merger," Carolyn Said, The San Francisco Chronicle, Nov. 7,
2001)
o "I think (HP's) approach makes sense," said Andrew Neff, an analyst with
Bear Stearns. "This is not about Carly, but about building a company." ("HP
tries to depersonalize the debate," Benjamin Pimentel, The San Francisco
Chronicle, Jan. 23, 2002)
o According to John Jones, an analyst at Salomon Smith Barney. "A lot of what
(Fiorina) is doing, in my view, should have been done 10 years ago." "When
Lou Gerstner came to IBM in 1993, the analyst community and the media tore
him apart. History has validated him, with the stock up 10 times where it
was." ("Vision Series", CNET News.com,
http://news.com.com/html/ne/vs/2022-1120-808672.html, Jan. 17, 2002)
o "Fiorina is doing what others are afraid of: securing a competitive future
that lowers costs for customers." ("HP's Bold Gambit: Good News for
Customers," by Pimm Fox, West Coast bureau chief, Computerworld, Sept. 17,
2001)
o "Instead, in a gutsy, complex, time-consuming, hazard-prone feat, Fiorina
has set in motion an event that acknowledges the sea change in IT.
Customers demand better value from vendors for hardware, software and
services. They seek vendors that speak with one voice and have the
longevity to see IT projects completed." ("HP's Bold Gambit: Good News for
Customers," Pimm Fox, West Coast bureau chief, Computerworld, Sept. 17,
2001)
THE NEW HP
o "The result? The new HP lives to fight on in the era of services and non-PC
platforms instead of being stuck fighting for the title of lowest-cost PC
maker." ("The Compaq-HP Merger: It's About Survival," Carl D. Howe with
Charles Rutstein, Charles Homs, Heather Liddell, Forrester Research, Sept.
4, 2001)
o "With a combined 65,000 services professionals, the new HP will be in a
unique position to retain, satisfy, and upsell these customers -- something
it couldn't do without the merger." ("The Compaq-HP Merger: It's About
Survival," Carl D. Howe with Charles Rutstein, Charles Homs, Heather
Liddell, Forrester Research, Sept. 4, 2001)
o "Look at the new HP a year from now for infrastructure outsourcing
deals....By the time the dust settles on this merger, the new HP will have
the staff and skills to handle desktop and multivendor networking jobs that
IBM Global Services and EDS won't touch." ("The Compaq-HP Merger: It's
About Survival," Carl D. Howe with Charles Rutstein, Charles Homs, Heather
Liddell, Forrester Research, Sept. 4, 2001)
o "While there are numerous naysayers, Aberdeen sees a significant upside
potential for synergy in many areas of the HP/Compaq business that should
not be ignored. ... Make no mistake, the combination of HP and Compaq could
indeed create an industry powerhouse." ("HP's Acquisition of Compaq: Beyond
the Naysayers, the Promise and the Opportunity," Peter Kastner, Chief
Research Officer at Aberdeen, Business Wire, Sept. 24, 2001)
o "With the Compaq deal, HP picks up two high-growth product lines -- the
iPAQ pocket PC, and Compaq's no-nonsense storage business -- and a
gold-plated, nonstop platform business. In five years, these technologies
will be more profitable than servers and desktop PCs." ("The Compaq-HP
Merger: It's About Survival," Carl D. Howe with Charles Rutstein, Charles
Homs, Heather Liddell, Forrester Research, Sept. 4, 2001)
o "The deal will make both HP and Compaq better suppliers, as well as
stronger industry competitors, partners and leaders." ("Should users be
intrigued by Hew-paq?," Peter Burris, industry analyst/Meta Group research
fellow, ZDNet, Sept. 6, 2001)
o Steve Duplessie, an analyst with Enterprise Storage Group Inc., said
"You're talking a large-scale storage company all of a sudden that begins
to rival EMC. From a technology perspective it's great." ("HP-Compaq would
muddy storage waters," Evan Koblentz, eWEEK, Sept. 7, 2001)
o "If the merger were to go through quickly, I think HP and Compaq could
block Dell from ever penetrating the glass house [enterprise data
centers]," said Brooks L. Gray, senior analyst of Technology Business
Research. ("PC Pair Goes for Broke," Todd Spangler, Interactive Week from
ZDWire, Sept. 13, 2001)
o Compaq and HP "immediately jump into the top league of vendors that provide
corporate-level Linux," said Rob Enderle, a Giga Information Group research
fellow. "HP will have better positioning against Sun [Microsystems] to say
it's the company of the future. It has Linux." ("Linux Emerges as Best OS
Play for HP-Compaq," Charles Babcock, Interactive Week from ZDWire, Sept.
13, 2001)
o "This is going to help merchants of either brand because, instead of two
weak competitors, you'll have one very strong one," said Brett Miller, a
consumer-electronics analyst for A.G. Edwards and Sons Inc. "The result
will be better offers on products and better support. Certainly, the merger
makes sense from a product standpoint." ("Best Advice is Not to Fret a
Compaq-HP Merger," David Sheets, St. Louis Post-Dispatch, Jan. 30, 2002)
o "This is a challenge of a different nature," says David B. Yoffie, a
Harvard Business School professor and strategy expert. "Another $80 billion
player in the market says this company is likely to be around. That
neutralizes to some degree the historic advantage of IBM." ("The New
Computer Landscape: As Mergers, Downturn Continue, Technology Companies
Assess Their Strategies for Survival," Gary McWilliams, William Bulkeley,
Lee Gomes, Pui-Wing Tam, Terho Uimomen, Rob Guth and Jerry Guidera, The
Wall Street Journal, Sept. 6, 2001)
THE OPPOSITION
o "The ongoing efforts by Walter Hewlett to undermine the transaction seem to
be losing momentum," he said. "He's sounding tactically defensive." (Scott
Keller, president of DealAnalytics.com in New York)("Compaq,
Hewlett-Packard Merger Looks Possible Again," The Dallas Morning News, Feb.
1, 2002)
o Hewlett "is saying we can do better," said George Elling, analyst at
Deutsche Banc Alex. Brown. "But he's not running the company. In the real
world, HP and Compaq have put a deal on the table. I'm more comfortable
with that." ("HP seeks a plan from Hewlett heir," Michelle Quinn, San Jose
Mercury News, Jan. 20, 2002)
o "While the positions of the families are interesting, they may be motivated
by their own personal or foundation-specific reasons," said Richard C.
Ferlauto, an Institutional Shareholder Services vice president. ("Hewlett
and Compaq Woo Big Investors for Merger," Chris Gaither, The New York
Times, Dec. 10, 2001)
o "Mr. Hewlett is a man without a plan. Nonrelatives of Walter would be
living la vida loca to vote against the only idea on the table." ("A `Yes'
for Noseholding Shareholders," Holman W. Jenkins, Jr., member of The Wall
Street Journal editorial board, The Wall Street Journal, Feb. 6, 2002)
o "Though his fears are cogent, Mr. Hewlett is finding that his writ runs
only so far with the media and investors if he isn't prepared to take over
the job of running the firm according to his own roadmap." ("A `Yes' for
Noseholding Shareholders," Holman W. Jenkins, Jr., member of The Wall
Street Journal editorial board, The Wall Street Journal, Feb. 6, 2002)
o The pinion of the controversy was stated clearly enough by Richard
Schlosberg III, head of the Packard Foundation, which has also opposed the
merger: "Our particular risk profile may not be the same as other
shareholders." ("A `Yes' for Noseholding Shareholders," Holman W. Jenkins,
Jr., The Wall Street Journal editorial board, The Wall Street Journal, Feb.
6, 2002)
o BusinessWeek Editor-in-Chief Stephen B. Shepard spoke with GE CEO and
Chairman Immelt on Jan. 15, 2002. Excerpts from conversation:
Q: Jack Welch said that Walter Hewlett's opposition to the
Compaq/Hewlett-Packard merger was "a sin." What are your thoughts on
Walter's standoff with the Hewlett-Packard board?
A: I am firmly on [HP CEO Carleton S. Fiorina's] side with respect to her
right to do it, the process she used to do it, and the fact that a board
can't work that way. There's a time and a place for a board to make a
decision and to make its feelings known. To break ranks and to come out and
question publicly is wrong. ("A Talk with Jeff Immelt," BusinessWeek, Jan.
28, 2002)
o David Dreman of Dreman Value Advisors in Jersey City, N.J., which owns
several million shares of H-P, calls the concept of an only-printers
company "far too risky and far too drastic." While H-P previously has said
that its deal with Compaq could result in layoffs of about 15,000
employees, even more layoffs would be required if H-P jettisoned its other
businesses to turn itself into solely a printer company, Mr. Dreman
says. "This goes against what the company is about," he says. ("A Bold, Old
Plan for H-P: Become Printer Company," Pui-Wing Tam, The Wall Street
Journal, Dec. 19, 2001)
THE RISKS OF STANDING STILL
o "It all comes down to a question of temperament and taste: Do you like your
risk served hot or cold? Both foundations would be the horror of any decent
financial planner, since their assets are heavily concentrated in H-P
stock. But the computer industry is changing. Are companies going to get
ahead of change and possibly make fools of themselves? Or hold back and
blame circumstances for any bad outcome? That latter option is more
tempting for a highly visible foundation head than an invisible shareholder
who knows nobody is going to come hunting his scalp if the merger turns out
badly." ("A `Yes' for Noseholding Shareholders," Holman W. Jenkins, Jr.,
member of The Wall Street Journal editorial board, The Wall Street Journal,
Feb. 6, 2002)
o "And without a means to get bigger quickly, H-P's alternative would be to
get smaller, leaning more heavily on its successful printer business (whose
profits actually come largely from ink refills). That might seem safer in
the short run but would likely prove riskier in the long run." ("A `Yes'
for Noseholding Shareholders," The Wall Street Journal, Holman W. Jenkins,
Jr., member of The Wall Street Journal editorial board, The Wall Street
Journal, Feb. 6, 2002)
VALUE TO CUSTOMERS, PARTNERS & VENDORS
o Niraj Patel, chief information officer of General Motors Corp.'s GMAC
Commercial Mortgage unit. Mr. Patel says he likes the deal because he is
"looking forward to working with just one vendor" ..."if we had just one
company to deal with, there would be a more integrated management platform,
a higher rate of customer service, and more integrated and better
products," he says. ("H-P, Compaq Struggle to Win Support From Corporate
Technology Buyers," Pui-Wing Tam and Molly Williams, The Wall Street
Journal, Dec. 20, 2001)
o Timothy Daley, director of application services at TRW Inc. "The strengths
of the two companies are complementary, so there will be a full breadth of
products that are strong, not weak." ("H-P, Compaq Struggle to Win Support
From Corporate Technology Buyers," Pui-Wing Tam, Molly Williams, The Wall
Street Journal, Dec. 20, 2001)
o "For us, the most exciting part is the post-merger benefits HP and Compaq
bring to the market," said Terry Cain, VP of enterprise server solutions at
Avnet Enterprise Solutions, a Tempe, Ariz.-based solution provider working
with both vendors. "I'll go on record and [say I] hope the merger goes
through." ("HP-Compaq Seal Of Approval -- Server, storage partners welcome
merger," Joseph F. Kovar, Computer Reseller News, Dec. 10, 2001)
o "We're supportive of the merger because it is important to have one
credible competitor for (rival PC maker) Dell," Mr. Stemberg said in an
interview (Tom Stemberg, chairman of Staples) ("Staples backs computer
groups' merger," Andrew Edgecliffe-Johnson, Financial Times, Jan. 28, 2002)
o Rich Baldwin, president and CEO of Nth Generation Computing, a San Diego
Compaq solution provider, said "This [merger] has got to have EMC scared
stiff." ("HP-Compaq Seal Of Approval -- Server, storage partners welcome
merger," Joseph F. Kovar, Computer Reseller News, Dec. 10, 2001)
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 HP's annual report on Form 10-K, as amended on January 30, 2002,
for the fiscal year ended October 31, 2001 and HP's registration statement on
Form S-4 filed on February 5, 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 February 5, 2002, HP filed a registration statement with the SEC containing a
definitive joint proxy statement/prospectus regarding the Merger. Investors and
security holders of HP and Compaq are urged to read the definitive joint proxy
statement/prospectus filed with the SEC on February 5, 2002 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 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.
* * * * *