Report: Compaq ponders future without HP

Compaq Computer, although it still backs its proposed merger with Hewlett-Packard Co. (HP), is beginning to look at a future as an independent company, according to a report published Tuesday.

Compaq Chief Executive Officer Michael Capellas, in a memo sent to employees last weekend, wrote that he still supports the deal with HP, but that "our responsibility is to maintain a pragmatic view of our business and a clear focus on the future," The Wall Street Journal reported.

Compaq would continue to offer its products whether "we are part of the new HP or a stand-alone company," Capellas wrote, according to the report.

A source within Compaq on Tuesday confirmed that Capellas sent out a memo to employees over the weekend, but wouldn't detail the contents, saying it is "just one of the regular status updates" that Capellas sends to Compaq employees.

The memo followed a decision Friday by the David and Lucile Packard Foundation to oppose the US$25 billion merger. The foundation owns a 10.4 percent stake in HP and is considered by many to hold the swing vote in the merger.

If the decision to abort the merger is made, it will come "in another few weeks," according to Thomas Perkins, a member of Compaq's board of directors, cited in The Wall Street Journal. "If it drags on for months and months and months, it's not good for both companies," he said, according to the report.

Compaq could ask for a preliminary tally of HP shareholders that support the merger, and insist on canceling the deal if HP can't show it has enough votes, The Wall Street Journal wrote, based on comments from a person close to the Compaq board.

HP and Compaq in a joint statement issued Friday said they are "disappointed" by the David and Lucile Packard Foundation decision and would forge ahead with the merger.

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