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By Suzanna Kerridge, 14 March 2002 12:45

NEWS With less than a week to go before the crucial HP shareholders vote, chief dissenter Walter Hewlett has sent out another letter to voters in the hope of galvanising support. Hewlett claims the merger is a terrible idea and predicts the company will lose 35 per cent of HP's best business if it refocuses on PCs and commodity computing. Hewlett said in a statement: "We believe [the merger] would destroy much of what makes HP great and would diminish HP's potential for profitability, growth and innovation. We believe that HP has a brighter future without Compaq under a "Focus and Execute" strategy." Hewlett claimed a number of important developments had occurred over the past few weeks to add strength to his campaign. He thanked institutional investors Banc of America, Brandes, Calpers, the Ontario Teachers Pension Plan and Wells Fargo for publicly denouncing the deal. Buoyed by the increasing support from shareholders, Hewlett also questioned HP CEO Carly Fiorina's business judgement once again. "The market has also demonstrated repeatedly that the proposed merger is not good for HP stockholder value. When the transaction was announced, HP's stock dropped 18.7 per cent and when we announced our opposition, it rose 17.3 per cent," he wrote. He also took the opportunity to take a swipe at the Institutional Shareholder Services' (ISS) recommendation to vote in favour of the deal. "Why is it that every time HP management gets purported "good news" HP stockholders lose value? We believe that the market is truly the ultimate shareholder advisory service and a much better judge of value than a lawyer at ISS." In a last ditched attempt to discourage shareholders against the deal, Hewlett dedicated the last page of the letter to a list of nine reasons why the merger was not possible. Issues such as the downgrading of HP's credit following the merger announcement, the fact that HP management has no experience of pulling off a similar deal and the resistance of HP staff all point to a doomed deal, he concluded.