HP CEO says Compaq is needed for expertise

Wednesday, Jan. 9, 2002 | 11:14 a.m.

The high-profile feud over Hewlett-Packard Co.'s plan to acquire Compaq Computer Corp. spilled onto the stage of the Las Vegas Hilton Theater Tuesday in an International Consumer Electronics Show keynote address.

HP Chief Executive Officer Carly Fiorina created a backdrop of the need to create a company capable of producing all aspects of digital photography to defend the $24.7 billion deal first announced in September.

"Our primary focus is to apply our expertise and intellectual property in electronics and systems to create a great end-to-end experience for anyone who uses a camera," said Fiorina, making her first CES keynote speech.

"We're not just thinking about the camera or the printer or the PC or the content or the network connection of the new kinds of services you can use to create T-shirts or coffee mugs or holiday cards," she said. "We're thinking about the whole system of devices, technologies, infrastructure and services required to deliver the experience, including that of the person who's receiving the images."

Many of the nearly 500 people who attended the speech, some wearing red pro-merger badges, anticipated Fiorina would have something to say about the infighting at HP. Early in her speech, she gave the impression she was going to stay away from the topic.

"You probably were expecting to hear a stump speech about merger votes or proxies or family legacies," she said.

Fiorina has kept out of the public eye since Dec. 7 when the Packard family foundation joined other family members and trusts in opposing the merger. But after dissident board member Walter Hewlett filed a letter with the Securities and Exchange Commission voicing concerns about the deal on Dec. 27, Fiorina and seven other directors responded Monday with a letter of their own.

Hewlett said he voted for the merger to help the company secure the best possible stock price, then publicly opposed the deal. Fiorina responded on the eve of her CES speech that Hewlett's remarks were "inaccurate and inappropriate."

But instead of a verbal assault Tuesday, she launched into a history of how photography has shaped people's impressions of the world, including showing slides of historic images, including some patriotic reflections of the World Trade Center attack.

She demonstrated the company's HP Photosmart digital cameras. They have docking systems that can connect the cameras directly to printers without a computer. As Fiorina demonstrated the systems, she made her point clear without mentioning the feud: The company needs Compaq's technological expertise to press ahead.

Foes have said the company doesn't need Compaq's personal computer division, which they say would dilute HP's digital imaging franchise. They say the company should instead focus on high-end machines such as its all-in-one printers, scanners and fax machines.

Fiorina said the company's history has been dotted with stances against critics who have told corporate founders their ideas wouldn't work.

"For those who would say it won't work, it won't sell or it won't succeed, I say, 'You don't know the people of the new HP,' " she said.

The shareholder vote on what experts consider one of the largest mergers in the history of the computer industry is expected late next month.