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 is a position paper presented by HP at the Gartner Symposium
ITxpo 2001 the week of October 8, 2001. This position paper is also posted on
HP's internal web site for employees and HP's web site for the public.
THE NEW HP: MORE CHOICE, MORE FREEDOM, MORE FLEXIBILITY
BACKGROUND
HP's focus has always been to engineer world-class products, technologies and
solutions and apply those in ways that benefit our customers. At the same time
that we've been engineering solutions for customers, we've actively been
transforming the company to shape new markets and seize emerging opportunities.
The foundation for our success has been and will continue to be based on four
key assets:
1. Real insight into evolving customer needs because we serve the
broadest range of customers, from consumers to enterprises, in the
industry.
2. A partnering approach to the suppliers of critical building block
technologies (e.g., Intel, Canon) that is second to none.
3. Commitment to a Research and Development capability that is able to
define and deliver innovative technologies to catalyze new ways of
utilizing Information Technology.
4. An enduring commitment to protecting our customers' investments in
information technology while delivering the highest levels of customer
service.
HP's objective is simple: to apply our market insight, our partnerships, our
inventive energy, and our services capabilities to help customers streamline the
implementation and operation of new technologies shaping business today.
THE NEW IT BUSINESS VALUE EQUATION
For nearly a decade, HP researchers, engineers and business leaders have been
fundamental to advancing almost every important standard component and
market-unifying architecture available -- from Ethernet to Systems Management
to Itanium to Linux to .Net and Java.
We believe that industry leadership during the next phase of technology
evolution will be defined by those companies that exploit market unifying
architectures to deliver more functional, lower cost, simpler, and more easily
integrated products.
We have a clear view of the economics of this industry, which says that R&D and
sales and marketing leverage will determine the winners. We believe our business
will be the most capital-effective IT company in the industry.
HP will continue to focus on leading four technology domains: IT infrastructure,
imaging and printing systems, personal access devices, and IT services.
Regardless of product category, our technologies feature common elements that
drive sustained business value:
1. They are market unifying, in that they attract innovation and support
from an expanding ecosystem of partners, suppliers and users.
2. They are cheaper to buy, in that they capture the scale economies of
volume production.
3. They are safer to adopt and exit, in that they can be acquired from
more sources.
4. When properly integrated and packaged, they are cheaper to run and
maintain, in that they can leverage common operating characteristics,
operations practices, and management tools.
In the IT infrastructure market, we continue to focus our effort on delivering
the industry's most manageable, easy-to-implement, and highly reliable and
serviceable infrastructure products. Our track record for assisting customers
through major technology transitions is exceptional and will serve our customers
well as we enter into a new phase of high performance, highly scalable,
always-on, and service-oriented infrastructure. We continue to base our product
strategies on industry standard components, like Intel IA-64 processors,
Microsoft Windows, Linux, Ethernet fabrics, and HP OpenView. We are investing
heavily in enterprise-class Unix capabilities and new federated storage
products.
In imaging and printing markets, we are building on our historic strength in
laser and inkjet printing to enter new and adjacent markets including
commercial printing and digital imaging. For example, in the commercial
printing arena through the acquisition of Indigo we'll help our business
customers save millions in the printing of annual reports, customer
brochures, and other types of printed collateral by bringing these
capabilities in-house so companies can print these materials on-demand. As
workflow requirements for image-rich content begins to increase, our
infrastructure offerings -- servers, storage, management software and
services -- will be an important advantage for customers.
In personal access markets, HP is building on its experience delivering the most
usable, yet functionally rich, products for creating and utilizing information.
From traditional personal computing to new mobile access devices, we are
engineering our products to be simpler to use, easier to manage, and maximally
cost effective. We are setting the pace of technology innovation around usage
architectures, processing, memory, and software ease-of-use. With our partners,
we'll continue to drive the media, management, and integration standards in
personal digital solutions. Finally, we'll remain a worldwide leader in supply
chain logistics to ensure that our go-to-market capability and customer support
are second to none.
In the IT service market, our focus continues to be on IT professionals -- a
community that we feel remains underserved. Our global service teams are focused
on delivering the highest quality customer support and complementary outsourcing
services for an always-on Internet infrastructure. In addition to HP's core
consulting capabilities, our strong partnerships with leading traditional
systems integrators and local service providers enable customers to design and
deploy complex business systems. We are also working to set new business
standards in emerging service provisioning markets.
THE PROPOSED COMPAQ MERGER -- ACCELERATING OUR STRATEGY
The proposed merger with Compaq must be evaluated in terms of our overall
transformation objectives. The merger will enhance our capabilities in a
number of critical industry segments -- including PCs, servers, and support
services -- and significantly enhance our operating leverage (estimated to
reach $2.5B in annual cost savings by mid-fiscal 2004).
But fundamentally, these are not the driving objectives.
Most importantly, HP has proposed this merger with Compaq to ACCELERATE our
strategy. It will be a catalyst for our transformation. It will save time --
our time, and our customers' time.
By unifying our customer bases and technology development initiatives, we
believe that the new HP will fuel a period of unprecedented innovation in the
enterprise and consumer technology domains. We, and our partners, will use
industry standard technology components from Intel, Microsoft, the open source
community, and elsewhere together with advanced interconnect technologies,
software, and services to attack market demands for fully integrated platform
solutions.
These platform solutions will:
o feature the lowest TCO in the industry;
o expose customers to the lowest level of operational risk;
o capture nearly all future application innovation; and
o be the foundation for all meaningful advances in infrastructure
platform technology.
Because of the products, solutions and services that HP and Compaq have defined
and are already delivering, customers are positioned to benefit dramatically
from this shift. Today, customers increasingly value stability, rock-
solid investment protection and proven engineering depth over more
superficial attributes; the new HP will meet those criteria more than any
other provider in the market. Taken together, these may appear bold
statements, but they're supported by market facts.
As a result of this proposed merger, HP expects to be:
o #1 in IT infrastructure(1);
o #1 in personal access devices(1);
o #1 in imaging and printing systems(1); and
o #3 in IT services(1).
o Unsurpassed in sales and marketing coverage;
o Arguably the most financially strong provider in the industry.
((1) based on combined reported revenues for each company's
trailing four quarters)
COMMITMENT TO CUSTOMERS
HP and Compaq's management are focused on the successful execution of the merger
in a manner that reinforces our commitment to our customers. We will measure our
progress against a clear set of criteria:
o Account Team Integration and Performance: Because customers drive
our success, sales force and account team integration is the most
important planning priority for the integration team. Our objective
is total integration of the sales and account experience for our
customers within 30 days of official close of the deal. We believe
customers should expect minimal disruption to their account
relationship experience.
o Clarity of Management Structure: The leadership of the new HP will
be clear. We have made and will continue to make early decisions on
company structure and leadership. It is an explicit objective of
this merger to create a management team that is best-in-class and
composed of the best from each company.
o Customer Service and Support: Our heritage is built on an
unquestioned commitment to sustaining customers' investments in IT
through daily operations and transition periods. We will honor
existing agreements and work to ensure that every engagement and
agreement henceforth be as rock solid as customers want and expect.
o Investment Protection: Customers will benefit from the industry's
leading investment-protection, technology-transition and long-term
maintenance programs. HP has explicitly made customer investment
protection and customer support a key input to its strategy process
for over a decade; that practice will continue.
o Market Leading Technology Introductions and Roadmaps: With the
addition of Compaq assets and capabilities, we believe our progress
in providing products, infrastructure and solutions that outperform
our competitors' offerings against a range of criteria, including
their TCO and ROI, will accelerate. HP will become synonymous with
products and solutions that work simply and simply work.
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FORWARD LOOKING STATEMENTS
This document contains forward-looking statements that involve risks,
uncertainties and assumptions. All statements other than statements of
historical fact are statements that could be deemed forward-looking
statements. For example, statements of expected synergies, accretion, timing
of closing, industry ranking, execution of integration plans and management
and organizational structure are all forward-looking statements. Risks,
uncertainties and assumptions include the possibility that the market for the
sale of certain products and services may not develop as expected; that
development of these products and services may not proceed as planned; that
the Compaq transaction does not close or that the companies may be required
to modify aspects of the transaction to achieve regulatory approval; or that
prior to the closing of the proposed merger, the businesses of the companies
suffer due to uncertainty; that the parties are unable to transition
customers, successfully execute their integration strategies, or achieve
planned synergies; 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). If any of these risks or uncertainties materializes or any of
these assumptions proves incorrect, HP's results could differ materially from
HP's expectations in these statements. HP assumes no obligation and does not
intend to update these forward-looking statements.
Additional Information about the Merger and Where to Find It
HP and Compaq intend to file with the SEC a joint proxy statement/prospectus
and other relevant materials in connection with the Merger. The joint proxy
statement/prospectus will be mailed to the stockholders of HP and Compaq.
Investors and security holders of HP and Compaq are urged to read the joint
proxy statement/prospectus and the other relevant materials when they become
available because they will contain important information about HP, Compaq
and the Merger. The 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 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 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. Full
participant information may be found in HP's Form 425 filed with the SEC on
September 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 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. Full
participant information may be found in Compaq's Form 425 filed with the SEC on
September 17, 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
joint proxy statement/prospectus when it becomes available.