Fiorina, Capellas defend HP/Compaq deal

Hewlett Packard (HP) chief executive Carly Fiorina and her Compaq counterpart Michael Capellas went on the offensive to defend their reasoning for the take-over that received a lukewarm reception from analysts and investors.

During the day HP's shares fell by $4.34 to $18.87, a drop of more than 18 per cent, and Compaq's by $1.27 to $11.08, more than 10 per cent. The market tumble knocked $5bn off the deal's worth from $25bn to $20bn.

"Both Michael Capellas and I, and our teams, are competitive people," Fiorina stated at a news conference. "When you're watching a competitor, you watch what the other guy is doing. I've been watching Compaq for some time."

Fiorina added that the two companies were talking about the same direction and vision, and were starting to make the same kind of choices. "It makes us a more effective competitor and an even more effective partner. It you don't believe it, watch," she said.

Capellas maintained that both companies are creating a new kind of industry leader that would be "founded on customer success, world-class engineering and best of breed products and services".

While the pair would not be drawn into specifics about future marketing and structure, Fiorina said that HP would be the dominant brand.

"HP will be the surviving brand but we are going to use the sub-brands of Compaq smartly. We have done a fairly comprehensive business plan around this combination, and a fairly comprehensive integration plan around this combination before we ever called the bankers in to actually do a transaction," she explained.

Both chiefs are confident that they will not run into regulatory problems with the European Union or US authorities. "We have spent a lot of time studying it and we feel pretty comfortable," said Fiorina, who believes there will be no problems because of the vast number of competitors and customers.