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By Suzanna Kerridge, 21 February 2002 14:40

NEWS HP CEO Carly Fiorina claims the tide is turning in favour of HP as the date of its shareholder meeting to vote on the proposed deal with Compaq draws nearer. She claims shareholders were gaining a renewed confidence in her ability to close the deal and a greater understanding of the consequences of not doing it. Fiorina also hinted that she expects the Federal Trade Commission (FTC) to approve the deal before the crucial 19 March shareholder meeting. In January, the company won EU approval of the multimillion-dollar deal. "One of the things we did a good job with the EU is that we didn't publicise it and we didn't politicise it. We're going to play it the same way with the FTC, " Fiorina said in the Financial Times. However, many analysts have claimed FTC approval is insignificant compared with winning the support of the Institutional Shareholders Services (ISS). Around 20 per cent of the HP shareholders subscribe to the proxy services group. Fiorina needs to win the ISS support to counter the 18 per cent share, controlled by Hewlett and Packard Foundation, which has already declared it will vote against the merger. To date, only one institutional investor, Alliance Capital - with a one per cent share - has come out in favour of the merger. Many, analysts predict, will wait and see what the ISS recommends before tying their colours to anyone's mast. The ISS is expected to issue its recommendation on the Compaq deal within the next couple of weeks. Apart from the regulatory approval, Fiorina has to overcome the "squishier" issue of merging two disparate company cultures and product lines. She claimed the 450-strong integration team was about to move into the final stages of planning the process to combine operations on 1 April. We're going to hit the ground running, she said. Redundancies are almost certain and Fiorina indicated the 36,000 people in loss-making enterprise and access business could be at the top of the list. It is far better to be able to control your destiny and eliminate positions at a time and manner of your own choosing, when you are improving profitability an improving your market position&than to be sitting with 36,000 people in a money-losing business and no clear plan to fix it, she said.