Walter Hewlett spells out merger alternatives

Walter Hewlett, the main opponent of the HP/Compaq deal, has finally put his money where his mouth is and outlined an alternative plan to secure the future of his father's company.

The 16-page "focus and execute" strategy would add $14 to $17 a share as opposed to the $5 to $9 per share proposed by HP CEO Carly Fiorina, he claims.

Hewlett's scheme is based on three key principles: boosting imaging and printing, build market share in the mid- to high-end enterprise computing arena and focusing on profit, not market, domination in the PC market.

He added it might even be possible to spin off the imaging and printing business within 12 to 18 months.

Hewlett also argued HP should consider pulling out of the corporate PC market - where Dell is the dominant force - to concentrate on its consumer PC business where it currently makes money.

"Investors have a clear choice. The strategy we have outlined is attractive to investors because we believe it will enhance stockholder value at a lower risk," said Hewlett in a statement.

In the document, the dissenter also made it clear he expected Fiorina to step down if the Compaq deal failed.

Until now, Hewlett has argued an alternative proposal to the Compaq deal was the responsibility of the HP board. But he claimed shareholders are now looking for an alternative lower-risk plan to acquire smaller companies rather than a bet-the-farm deal.

However, Fiorina has dismissed Hewlett's plan as one "hastily cobbled together in an attempt to satisfy those who question his failure to provide a viable alternative to the merger with Compaq".

Her financial advisers added to Fiorina's scorn, claiming the plan was a combination of "motherhood and apple pie platitudes and financial arithmetic of advocacy".