It could take weeks before the shareholder vote is final on Hewlett-Packard Co.'s US$21 billion bid to acquire Compaq Computer Corp., but it seems clear already that a six-month battle between company executives and opponents of the deal has threatened the company's culture, which many shareholders who voted in person Tuesday said is its greatest asset.
HP said Tuesday afternoon that preliminary results showed the acquisition had been approved, although opponents said the vote was still too close to call.
Comments from those who sat through a question-and-answer session Tuesday at the Flint Center in this Silicon Valley city clearly show that a mere vote count won't capture the sheer emotion behind the decision.
Groups of shareholders milling around at the meeting were dressed in green suits and hats, representing the color of the ballots used to cast a "no" vote on the acquisition. One opponent beat a drum to show his disapproval. Another shareholder wore a name tag that didn't give his name, just his vote: No.
Several of the opponents here said they fear the proposed deal, and the way it has been pushed by current management, flies in the face of the company's traditional philosophy. That philosophy, which the company's founders called the HP Way, called for a flat management structure and an environment in which individual achievement was rewarded and employees felt valued. The HP Way has been credited with fostering strong employee loyalty.
Although some attendees here clearly voted in favor of the deal, they seemed to be in the minority. The chief dissenter, Walter Hewlett, an heir of company co-founder William Hewlett, received a standing ovation before and after his short statement during a question-and-answer session with shareholders. Meanwhile, top dealmaker Carly Fiorina, chairman and chief executive officer (CEO) of HP, mostly found herself defending the deal to an unsettled crowd.
Mary Ann Gorski, a former HP employee living in Sunnyvale, California, expressed her dislike of the acquisition bid, arguing that it threatens the culture of the company, an argument that has surfaced repeatedly in the six months since the deal was first announced.
"I came to vote because of my affection for the HP Way, which is quickly being buried," Gorski said after casting her ballot against the acquisition.
Most of her opposition was based on a sense that HP's management had brokered the deal with Compaq largely without taking into account its employees, a charge that the Fiorina rebuffed numerous times here.
"I think there's a disassociation between the management and the employees," Gorski said. "All I heard here was, 'we have to have profits to stay in business.' But they didn't say anything about the moral fabric of this company, which is its employees.
"The HP employees that I've talked to feel that the people on top will get big bucks and the people at the bottom will lose their jobs." she said.
In fact, many HP employees will lose their jobs if the merger is approved. The company reaffirmed Tuesday that about 15,000 jobs will be cut from the combined company if the acquisition is approved. However, if it is squashed, Fiorina noted that steep layoffs will still be imminent.
Jim Avera, an ex-employee at HP, identified the sense of emotional connection between employees and the company as a reason for the heated debate leading up to Tuesday's closing of the shareholder polls.
"I think employees and retirees lament the loss of the good old days," Avera said. "For financial success, I think the merger is the best thing to do, but the problem is, HP also has a tradition. And this was certainly brought into focus. "However, when asked which way he voted, the Redwood City, California, resident dodged the very question he came to answer. "In the end, I dawdled until the polls closed," he said, not disclosing which way he voted.
Ted Laliotis, a 20-year employee at HP who is now retired and living in Silicon Valley, was one of the outwardly opposed shareholders. Standing outside the shareholder meeting, Laliotis was greeted by friends and former colleagues who clearly shared his opposition to the deal.
"I felt the same way coming out as I did going in," he said, attributing his "no" vote to what he categorized as poor decision-making by HP chairman and CEO.
"The fatal mistake Carly made is that she didn't poll the employees first," he said.
When HP announced its plans to acquire Compaq, it was a surprise to shareholders as well as to the media, which often reports rumors of such large deals, Laliotis said.
"That's what startled a lot of the employees," he said. Not asking employees ahead of time "was a huge mistake for a company whose history is strongly based on employees."
Both Walter Hewlett and HP executives claim to have gauged employee acceptance of the acquisition as it was being debated in the media, but they came to different conclusions. Hewlett conducted surveys of employees at various HP campuses around the U.S., noting that in many cases about 60 percent of those polled didn't back the deal.
Setting off a rumble of jeers from shareholders during the question-and-answer period at Tuesday's meeting, Fiorina said internal HP polls of its employees showed that the majority of those around the world did back the deal. "That is a fact based on our survey," she said during the meeting.
With the proxy contest now at a close, emotions have begun to simmer in anticipation of a final tally of the votes. While product lines, customer relationships and the status of employees at both companies remain unsettled, all parties here agreed that HP will move on from this ordeal one way or another.
"I think either way the vote comes out it's going to be a successful company," said Art Benjamin, a shareholder from Los Altos, California, who cast his vote here. "It will just depend on which direction it will end up going."