HP-Compaq merger set for green light

The $23bn HP-Compaq merger is expected to get the green light tomorrow when shareholders vote whether or not to accept the deal.

Industry analysts in the UK said the force of the momentum generated by HP CEO Carly Fiorina looks set to swing the vote in her favour.

However, analysts also warned that consequences of failure for both Fiorina and the businesses of HP and Compaq were grave.

Mike Davis, senior research analyst at the Butler Group, said: "Despite the strong defence from the 'no' campaign, Carly has managed to generate significant momentum. It looks like it's going to go Carly's way."

Tony Lock, senior analyst at Bloor Research, agreed and said the general consensus is that the deal will go ahead.

Lock added: "A 'no' vote now would be incredibly damaging - a divorce would be messy and it would be costly."

Shareholders who haven't done so already are due to cast their votes at a special meeting at 08:00 (PST) in Cupertino, California.

However, despite confidence from some analysts that the deal will go through, for some the vote is just too close to call.

Son of HP founder and board member Walter Hewlett has waged a vigorous campaign to persuade investors to kill the merger.

HP has responded viciously, calling Hewlett a dilettante "musician and academic" with no idea of the priorities of modern business.

Analysts claim Fiorina has put her head on the block with her backing of the deal.

Butler Group's Davis said: "Carly has utterly nailed her colours to the mast of this deal. Put simply, if this didn't go through she would go down with the ship."

He also warned that Compaq would struggle to survive a collapse of the deal.

"Compaq has had a hiatus in the last few months while this has been going through. It has lost development time and management focus. They seem to have no contingency plans," he said.

However, Clive Longbottom, service director for analyst house Quocirca, said this was no reason to push through something that wasn't going to work.

He told silicon.com: "There seems to be a fatalistic approach that 'we have to do it because we've come so far'. This is nonsense - if something is fundamentally wrong then you just don't do it."