Feeds

Clash of the Sandbags : Carly, Walter go to court

It's the HP wa-hey

  • alert
  • submit to reddit

Boost IT visibility and business value

Even in her dotage, we suspect, Carly Fiorina will feel some trepidation before answering the doorbell. Instead of the regular Meals on Wheels guy, or the home help, there will be Walter B Hewlett delivering a severed horse's head.

Hewlett Jr tacitly accepts that it lost the SirCam merger vote, but only by a whisker. Nevertheless he continues to pursue the case through the courts, and for Carly, the torment continues. Hewlett has filed suit in Delaware, alleging that HP misled shareholders in the run-up to the final vote, and so obliging Fiorina to take the stand. Hewlett's trawls through HP and Compaq mail servers have produced a paper mountain of doubt expressed by senior executives - including the rock and rolling Compaq CEO himself.

"At our speed and progress, we will fail," wrote Capellas in a diary entry , shortly before Hewlett Jr began his expensive campaign of newspaper advertisements. (It's hardly a indication of confidence in Compaq's own PocketPC that Mike committed these thoughts to paper, not a PDA. And we don't blame him).

A lower ranking executive in HP's finance office confirmed that there was little upside for Hewlett Packard shareholders in the deal - a point Walter had consistently made since publicly dissenting last fall. It doesn't require a Harvard MBA to see that such leviathan technology mergers have historically failed to produce shareholder benefit. And that's Hewlett's strongest card.

Although the Capellas memo is supposedly the most "shocking", the duller analysis by the junior executives are actually far more damaging. Capellas' memo can be justified on the grounds of due diligence, although he'll hardly thank Carly for her contribution on the witness stand yesterday claiming that as he was writing his pessimistic note, the merger was actually "ahead" of scheduled. Either Carly's not quite telling the truth, or the respective CEOs were singing from different hymn sheets.

Two days before the final vote, HP executives were panicking that the deal did not have enough backing from shareholders, having discovered that Deutsche Bank was going to vote against the Sircam Merger.

Hewlett alleges that as an inducement to back the merger, HP promised Deutsche Bank business for a extending a credit arrangement. This mirrors the practice of investment bankers whoring for business while privately believing their investments were worthless, which the New York state attorney detailed earlier this month in this report [126k PDF].

"The agreement was never disclosed publicly, was never disclosed to the board of Hewlett-Packard. And it was never apparently even disclosed to the chairman and CEO of the company,'' said Walter B Hewlett's attorney, cited in the Mercury.

But in spite of a voicemail from Fiorina to the Bank in which she said that she looked forward "to doing business", Walter needs to produce the smoking pistol as innuendo isn't good to be enough. He might have it - but we haven't seen it.

However, as we note earlier, the detailed analysis from the Hewlett Packard CFO office may be enough to convince the judge that HP was engaging in a deception, saying one thing publicly, and another privately. HP memos suggest the merger would drive down the share price ten per cent, rather than up by twelve to thirteen per cent, that combined losses would be far higher than publicly stated, and that an $800 million charge was missing from the public prediction, too.

Carly said these were the result of "sandbagging". Now "handbagging" we're familiar with - in the 1980s it was the name coined by the press to describe Prime Minister Mrs Thatcher's admonitions of her male cabinet colleagues. Which were frequent and very public).

More than the Capellas memo, and even more than alleged Deutsche Bank backhander, Carly's sandbag - a deception of HP shareholders - could be fatally damaging. ®

The Power of One Brief: Top reasons to choose HP BladeSystem

More from The Register

next story
Stick a 4K in them: Super high-res TVs are DONE
4,000 pixels is niche now... Don't say we didn't warn you
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
Philip K Dick 'Nazi alternate reality' story to be made into TV series
Amazon Studios, Ridley Scott firm to produce The Man in the High Castle
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Amazon Reveals One Weird Trick: A Loss On Almost $20bn In Sales
Investors really hate it: Share price plunge as growth SLOWS in key AWS division
Bose says today is F*** With Dre Day: Beats sued in patent battle
Music gear giant seeks some of that sweet, sweet Apple pie
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
Too many IT conferences to cover? MICROSOFT to the RESCUE!
Yet more word of cuts emerges from Redmond
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Securing Web Applications Made Simple and Scalable
Learn how automated security testing can provide a simple and scalable way to protect your web applications.