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.
February 13, 2002
Dear Walter:
We continue to be extremely disappointed with the manner in which you have
chosen to oppose the merger with Compaq. We take serious issue with your latest
set of public statements on this topic.
As you are well aware, merging with Compaq is the culmination of a
two-and-a-half year process -- a process in which the Board of Directors took a
long, hard look at what was right and what was wrong with our business. This
process began with the Board's acknowledgement that -- in light of the changing
industry dynamics -- HP was losing ground and decisive action was required. When
the board brought in a new CEO, we began an intensive evaluation of our
customers' needs and HP's ability to meet them.
While we fully agree with your view that HP must invest in and grow our imaging
and printing business, the health and profitability of our other businesses
impacts our ongoing ability to make these investments. Furthermore, high-growth
categories like digital publishing and digital imaging are completely
interrelated to HP's capabilities in storage, servers, network management and
services.
Merging with Compaq will enable HP to fill the gaps in our enterprise portfolio
in a way that simply can't be achieved through organic growth and small,
targeted acquisitions. Compaq brings market-leadership in critical growth
markets, like Windows servers, high-performance computing and enterprise
storage.
With Compaq, we will double our service and support capacity in mission critical
consulting, outsourcing and support. Support is not a low-margin business as
you've suggested, but a highly profitable business that we want more of.
HP shouldn't simply walk away from the PC business. PCs are important to our
strategy of being an end-to-end solutions provider. As you know, we have already
outsourced our PC manufacturing. We can fix this business,
but more needs to be done. Specifically, by combining HP's successful retail
model with Compaq's commercial model we can build a profitable, cash-generating
business and achieve far more together -- faster -- than either company could on
its own.
Furthermore, recent statements that you have made about our CEO suggest to the
public that she and management have been making strategic decisions
independently and mere rubber-stamping is occurring at the Board level. You are
misrepresenting our thorough process and the intensive effort we undertook to
evaluate numerous alternatives. As you know, we vigorously debated all matters
of strategy, including the Compaq merger. You have insulted our personal
commitment and fiduciary responsibility which each of us takes very seriously.
Lastly, we want to state clearly that your comments about our CEO do not
represent the opinion of your fellow Board members. We have never wavered in our
confidence in Carly and our support for her performance. You know this
firsthand.
Signed,
/s/ PHILIP M. CONDIT /s/ PATRICIA C. DUNN
Philip M. Condit Patricia C. Dunn
/s/ RICHARD A. HACKBORN /s/ SAM GINN
Richard A. Hackborn Sam Ginn
/s/ GEORGE A. KEYWORTH II /s/ ROBERT E. KNOWLING JR.
George A. Keyworth II Robert E. Knowling Jr.
FORWARD-LOOKING STATEMENTS
This letter 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.