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Wednesday, 7 November, 2001, 21:54 GMT
Hewlett-Packard's merger woes mount
graphic
David Packard has joined the opposition to the merger
The multi-billion dollar deal between Hewlett-Packard and Compaq Computer has met with further opposition after a member of the Packard family said he too was against the merger.

On Tuesday, William Hewlett, son of Hewlett-Packard co-founder Bill Hewlett, said his family would vote against the merger deal.

On Wednesday, David Packard, the only son of Mr Hewlett's partner, Dave Packard, said he believes his family will vote against the deal as well.

Dave Packard (left) and Bill Hewlett of Hewlett-Packard fame
Dave Packard and Bill Hewlett famously started H-P in a garage
This latest announcement further clouds an already shaky pact many see as doomed.

The computer giants announced the deal in early September. It is valued at $18.4bn (12.6bn).

In making his announcement yesterday, Mr Hewlett, whose family and namesake foundations control about 100 million shares of HP stock, said he felt the merger would not "give Hewlett-Packard what it need most to create additional shareholder value".

For his part, Mr Packard said he aggrees with the Hewlett family's choice not to support the merger.

He also said that after discussions with fellow trustees of the Packard Humanities Institute, he believes he will follow the Hewlett family's lead.

In a pickle

Analysts on Wednesday noted that with the high-profile opposition coming from both sides of the founding men's families, the merger deal has a greater chance of foundering.

"Does it have an impact? Yes," said Noel DeDora, senior portfolio managers at Fremont Investment Advisors.

"The more people you have coming out against it, the more possibility that the deal will fold."

But, while Mr Hewlett had the backing of his sisters in deciding to vote against the merger, Mr Packard has yet to secure the vote of his family's foundation against the pact, or that of his sister, Susan Packard Orr.

Wall Street has largely opposed the deal since its announcement.

Continued shares slide

Speculation has been swirling for months that failure of the merger deal to pull through may result in the ousting of HP chief executive Carly Fiorina.

Ms Fiorina's tenure at HP has been characterised by tumbling shares price and erosion of the firm's market share in the personal computer (PC) business.

During the last year, HP shares have lost over half their value, and some shareholders have expressed doubts that Ms Fiorina is the right person to steer the firm through a soft computer hardware market.

Shares of Compaq, the Houston, Texas-based computer maker that was recently wrested from its number one position by rival Dell Computer, fell further on Wednesday, losing 6% in afternoon New York Stock Exchange trading.

The PC-maker's shares fell nearly 4% after the Hewletts made their announcement on Tuesday.

Meanwhile, shares of HP as slipped slightly on Wednesday after vaulting 17% on Tuesday. By late afternoon, HP stock had slipped about 3% to near $19.25 a share.

See also:

06 Nov 01 | Business
Hewlett family to vote down merger
04 Sep 01 | Business
Profile: HP's Carly Fiorina
06 Sep 01 | Business
Tough sell for PC giants merger
13 Feb 01 | Business
Hewlett-Packard re-invents itself
05 Sep 01 | Business
Jobs slashed in biggest PC merger
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