HP/COMPAQ: HP board member resigns from Hewlett Foundation

A key member of Hewlett-Packard Co.'s board resigned Thursday as director of the Hewlett Foundation, to protest the Foundation's intention to vote against the company's proposed acquisition of Compaq Computer Corp.

Richard A. Hackborn, a 33-year HP veteran who has held various high-level executive positions at HP, including the company's chairmanship, is a strong supporter of the planned merger. He abruptly resigned from the Hewlett Foundation Thursday after six years on its board.

"Their opposition does not address any of the issues or opportunities of this company," Hackborn said in a statement. "Our plan secures HP's future."

The Hewlett Foundation is led by Walter Hewlett, who is the son of HP co-founder William Hewlett, and has been one of the most active opponents of the merger. The HP heir confirmed his intent to wage a proxy battle against the deal last week, following a decision by the David and Lucile Packard Foundation to oppose the merger.

"Walter Hewlett's decision to wage an ill-advised proxy fight opposing HP's merger with Compaq deeply conflicts with my and the HP Board's belief that the merger represents the very best way to deliver the value and growth HP's shareowners, customers, and employees deserve," Hackborn said in a statement Thursday.

Hackborn and other HP executives, including HP's Chief Executive Officer Carly Fiorina, have pledged to forge ahead with the merger despite opposition from members of the Hewlett and Packard families who together own about 18 percent of HP's shares.

On Wednesday, the executive in charge of integrating the operations of the two computing giants held a press conference to tell shareholders that the company's board had no intention of calling off the merger. Thursday, the company again responded to opposition in a statement.

"A majority of HP employees are in support of the merger, as per our survey data, and we are not seeing negative impact to our customer relationships because of the merger," HP said in a statement Thursday, opposing Hewlett's proxy-fight intentions.

Hackborn's decision to quit the Hewlett Foundation's board could hurt the proposed merger, because it widens the rift between supporters and opponents of the deal, said Rob Enderle, an analyst with Giga Information Group Inc. It also could make it more difficult for HP to win support for the merger from shareholders who are pegged to vote on the merger plan within the next three months, he said.

"They need to turn around these foundations," Enderle said. "Resigning from the Foundation doesn't build anybody's confidence. This is just one more bad political move."

The merger was valued at around US$25 billion when it was first announced in early September.

In a New York Times article Wednesday, Hackborn said that he has been one of the pillars behind HP's efforts to acquire Compaq. He told the Times that if shareholders don't approve the merger, the current board and top management will probably walk away from the company. "They will have to get a board and a management to fix the PC business and these other problems."

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