Filed by Hewlett-Packard Company Pursuant to Rule 425
Under the Securities Act of 1933
And Deemed Filed Pursuant to Rule 14a-12
Under the Securities Exchange Act of 1934
Subject Company: Compaq Computer Corporation
Commission File No.: 1-9026
This filing relates to a planned merger (the "Merger") between Hewlett-Packard
Company ("HP") and Compaq Computer Corporation ("Compaq") pursuant to the terms
of an Agreement and Plan of Reorganization, dated as of September 4, 2001 (the
"Merger Agreement"), by and among HP, Heloise Merger Corporation and Compaq. The
Merger Agreement is on file with the Securities and Exchange Commission as an
exhibit to the Current Report on Form 8-K, as amended, filed by Hewlett-Packard
Company on September 4, 2001, and is incorporated by reference into this filing.
The following article relating to the Merger presents highlights from a
discussion session with HP employees led by Carleton S. Fiorina, HP's
Chairman of the Board and Chief Executive Officer, and Ann M. Livermore,
President, HP Services. The article is posted on HP's internal web site.
ROSEVILLE RALLY
CEO CARLY FIORINA AND HP SERVICES PRESIDENT ANN LIVERMORE VISIT ROSEVILLE,
CALIFORNIA, FOR A COFFEE TALK WITH EMPLOYEES.
The HP-Compaq merger was foremost on employees' minds as CEO Carly Fiorina
and Ann Livermore, HP Services president, rolled into Roseville, California,
for a coffee talk November 28. Approximately 700 employees gathered in the
cafeteria to participate directly in the session, while another 850 gathered
to watch the broadcast in several locations across the sprawling Roseville
campus.
Ann and Carly delivered brief introductions, touching on how the merger will
benefit HP's services business, the changes driving the IT industry and the
choices the company must make if it is to perform up to its full potential.
Then, during a lengthy Q&A session, the two leaders addressed a number of
issues employees sent their way, including the PC business, media commentary
on Carly's leadership, and lessons HP managers have learned from past mergers.
BOON TO SERVICES
The HP-Compaq merger allows HP to "make the first move in what we believe is
going to be a very, very major transformation" throughout the industry, Ann
told the audience. Several shifts are altering the maturing IT industry, she
said. As industry revenue growth rates slow and business models change,
ongoing revenue streams increasingly are becoming necessary to fuel strong
R&D investments.
The combination produces some "phenomenal advantages" to HP's services
business, Ann explained.
"Clearly, bigger is better," she said. "So, from the services business
perspective, HP and Compaq are No. 3
combined. Bigger is better because customers care about your capacity to do
big global deals and the combination basically doubles everything that we
have."
The value of a large support business, she went on to say, should not be
discounted. This business provides the foundation for the total customer
experience and customer loyalty, allows the company to sell additional
products and services, and delivers a predictable, high-profit revenue stream.
"There's no question that Hewlett-Packard is the best at delivering
mission-critical solutions to our customers running in any operating
environment," she continued. "Our multi-vendor, multi-technology
capabilities -- we will truly have capabilities across every technology
that's available."
The merger will also allow HP to build on strengths in vertical areas such as
telecommunications, manufacturing, financial services and government, Ann
stated.
TO SPIN OR NOT TO SPIN
Carly began by thanking Roseville employees for their contributions to an
"outstanding" fourth quarter and a tough but productive 2001. Reminding the
audience of what she covered on her first visit two years ago -- strategy,
balance and performing up to the company's full potential -- she said she has
seen considerable progress.
Some employees have asked her why it is so important that HP has a healthy
computing business and why the company simply doesn't spin off the imaging
and printing business, Carly said.
The reasons, she responded, are twofold. "One, when you're a cash cow, you
don't get invested in," she said. "You just get milked. So, if we want to
stay a leader in imaging and printing, we have to have healthy businesses so
that we can continue to invest in it for leadership."
In addition, advances in imaging and printing depend on capabilities in
services and in the computing business, she added. "Anybody use a digital
camera lately?" she asked the audience. "That experience would not be as
useful as it is
without all the things we understand about the computing infrastructure, the
software, the hardware and the networking capabilities."
LOOKING AT OPTIONS
During the Q&A session, Carly discussed the options available to restore
ailing businesses such as PCs and Windows-based servers.
The HP-Compaq merger brings a "scope and a scale" that will allow the new HP
to achieve "massive leverage" on its cost structure, gain a larger customer
installed base and boost revenue, she added.
Despite challenges in the PC and Windows-based server businesses, Carly
noted, HP is one of the few technology companies that has remained profitable
through the downturn.
KEEPING THE FOCUS ON CUSTOMERS
When an employee inquired about the media and financial community's views on
Carly's leadership, HP's CEO stressed the importance of focusing on
customers' perceptions.
"The vast majority of customers I've talked to get this, get what we're
doing, believe we've made huge progress as a company and, therefore, are
saying, 'let's go,'" she told the audience.
"If we serve customers well, shareowners will follow," she continued.
HP has learned several lessons from its past acquisitions, she said in
response to another employee.
"Among other things, you better have your strategy set before you go buy
somebody," she said. "In other words, buying someone is not a strategy."
It's also vital for companies to have "very clear targets" about where the
value lies, how to get the value out and who will take on specific tasks, she
added. Another lesson
learned, she noted, is to have individuals dedicated to the integration so
others can focus on business as usual.
Carly encouraged employees and managers to take advantage of the
information -- including a recent interview conducted with HP Board member
Dick Hackborn -- about the merger available on [HP's internal web site].
FORWARD-LOOKING STATEMENTS
This document contains forward-looking statements that involve risks,
uncertainties and assumptions. If any of these risks or uncertainties
materializes or any of these assumptions proves incorrect, the results of HP
and its consolidated subsidiaries could differ materially from those
expressed or implied by such forward-looking statements. All statements other
than statements of historical fact are statements that could be deemed
forward-looking statements, including any projections of earnings, revenues,
synergies, accretion or other financial items; any statements of the plans,
strategies, and objectives of management for future operations, including the
execution of integration and restructuring plans and the anticipated timing
of filings, approvals and closings relating to the Compaq transaction or
other planned acquisitions; any statements concerning proposed new products,
services, developments or industry rankings; any statements regarding future
economic conditions or performance; any statements of belief and any
statements of assumptions underlying any of the foregoing. The risks,
uncertainties and assumptions referred to above include the ability of HP to
retain and motivate key employees; the timely development, production and
acceptance of products and services and their feature sets; the challenge of
managing asset levels, including inventory; the flow of products into
third-party distribution channels; the difficulty of keeping expense growth
at modest levels while increasing revenues; the challenges of integration and
restructuring associated with the Compaq transaction or other planned
acquisitions and the challenges of achieving anticipated synergies; the
possibility that the Compaq transaction or other planned acquisitions may not
close or that HP, Compaq or other parties to planned acquisitions may be
required to modify some aspects of the acquisition transactions in order to
obtain regulatory approvals; the assumption of maintaining revenues on a
combined company basis following the close of the Compaq transaction or other
planned acquisitions; and other risks that are described from time to time in
HP's Securities and Exchange Commission reports, including but not limited to
the annual report on Form 10-K for the year ended Oct. 31, 2000, and
subsequently filed reports. HP assumes no obligation and does not intend to
update these forward-looking statements.
ADDITIONAL INFORMATION ABOUT THE MERGER AND WHERE TO FIND IT
On November 15, 2001, HP filed a Registration Statement with the SEC
containing a preliminary joint proxy statement/prospectus regarding the
Merger. Investors and security holders of HP and Compaq are urged to read
the preliminary joint proxy statement/prospectus filed with the SEC on
November 15, 2001 and the definitive joint proxy statement/prospectus when it
becomes available and any other relevant materials filed by HP or Compaq with
the SEC because they contain, or will contain, important information about
HP, Compaq and the Merger. The definitive joint proxy statement/prospectus
will be sent to the security holders of HP and Compaq seeking their approval
of the proposed transaction. The preliminary joint proxy
statement/prospectus filed with the SEC on November 15, 2001, the definitive
joint proxy statement/prospectus and other relevant materials (when they
become available), and any other documents filed by HP or Compaq with the
SEC, may be obtained free of charge at the SEC's web site at www.sec.gov. In
addition, investors and security holders may obtain free copies of the
documents filed with the SEC by HP by contacting HP Investor Relations, 3000
Hanover Street, Palo Alto, California 94304, 650-857-1501. Investors and
security holders may obtain free copies of the documents filed with the SEC
by Compaq by contacting Compaq Investor Relations, P.O. Box 692000, Houston,
Texas 77269-2000, 800-433-2391. Investors and security holders are urged to
read the definitive joint proxy statement/prospectus and the other relevant
materials when they become available before making any voting or investment
decision with respect to the Merger.
HP, Carleton S. Fiorina, HP's Chairman of the Board and Chief Executive
Officer, Robert P. Wayman, HP's Executive Vice President, Finance and
Administration and Chief Financial Officer, and certain of HP's other
executive officers and directors may be deemed to be participants in the
solicitation of proxies from the stockholders of HP and Compaq in favor of
the Merger. The other executive officers and directors of HP who may be
participants in the solicitation of proxies in connection with the Merger
have not been determined as of the date of this filing. A description of the
interests of Ms. Fiorina, Mr. Wayman and HP's other executive officers and
directors in HP is set forth in the proxy statement for HP's 2001 Annual
Meeting of Stockholders, which was filed with the SEC on January 25, 2001.
Investors and security holders may obtain more detailed information regarding
the direct and indirect interests of Ms. Fiorina, Mr. Wayman and HP's other
executive officers and directors in the Merger by reading the preliminary
joint proxy statement/prospectus filed with the SEC on November 15, 2001 and
the definitive joint proxy statement/prospectus when it becomes available.
Compaq and Michael D. Capellas, Compaq's Chairman and Chief Executive
Officer, and certain of Compaq's other executive officers and directors may
be deemed to be participants in the solicitation of proxies from the
stockholders of Compaq and HP in favor of the Merger. The other executive
officers and directors of Compaq who may be participants in the solicitation
of proxies in connection with the Merger have not been determined as of the
date of this filing. A description of the interests of Mr. Capellas and
Compaq's other executive officers and directors in Compaq is set forth in the
proxy statement for Compaq's 2001 Annual Meeting of Stockholders, which was
filed with the SEC on March 12, 2001. Investors and security holders may
obtain more detailed information regarding the direct and indirect interests
of Mr. Capellas and Compaq's other executive officers and directors in the
Merger by reading the preliminary joint proxy statement/prospectus filed with
the SEC on November 15, 2001 and the definitive joint proxy
statement/prospectus when it becomes available.
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