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Compaq, H-P merger under growing pressure
Hewlett-Packard and Compaq Computer stood firm on plans for their $21 billion merger on Wednesday even as pressure mounted from Hewlett and Packard family members to call off the deal.
Wall Street analysts and investors, however, weren't so certain about Hewlett-Packard's proposed acquisition of Compaq, saying the dissension means the likelihood of its closing has dropped significantly.
In addition, they said the deal's failure would mean Hewlett-Packard chief executive Carly Fiorina may not be in the top spot for long.
Fiorina has fought hard for the merger, staking her reputation on it creating a computer, printer and services powerhouse to rival technology industry leader International Business Machines.
Lehman Brothers analyst Dan Niles said Fiorina, along with the deal, is up for a vote.
"If the shareholders vote against this deal," he wrote in a research note, "it is hard to see how she will remain."
In Los Angeles on Wednesday, Fiorina declined to take questions from waiting reporters. Her only indirect comment on the controversy was couched in a general remark to a civic group on what it takes to be CEO: "Doing that job always requires the courage of one's convictions."
HP, aiming to trim costs, has suspended salary raises indefinitely until business conditions resume, according to an email sent to employees about a week ago.
Since the merger was announced on Sept. 4, wary investors have unloaded both companies' shares, knocking $4 billion off the deal's value.
Bureau Report