Filed by Hewlett-Packard Company Pursuant to Rule 425
Under the Securities Act of 1933
And Deemed Filed Pursuant to Rule 14a-6
Under the Securities Exchange Act of 1934
Subject Company: Compaq Computer Corporation
Commission File No.: 333-73454
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 an article relating to the Merger. This article is posted on
HP's internal web site.
BEHIND THE GARAGE DOORS
A WEEK IN THE LIFE OF THE INTEGRATION OFFICE
By John Pollack and Michael Lynberg
In the RULES OF THE GARAGE poster, light shines from behind closed doors as
inventors burn the midnight oil to build a great company. For members of the
post-merger integration team, laboring behind closed doors -- in what is known
as the "clean room" -- that nostalgic image isn't far from reality.
"We've done more in a short amount of time than any of us individually thought
possible, and that's extremely motivating," says HP IT integration lead Pete
Karolczak, who has been working behind the scenes to invent the new, post-merger
Hewlett-Packard. "It's been rewarding to look in the mirror and see how we can
be better."
By necessity, planners from HP and Compaq are both looking at ways they can do
better, together. With a shareowner vote scheduled for HP shareowners on March
19 and Compaq shareowners on March 20, members of the integration team have been
tackling myriad details necessary for a smooth transition starting Day One, from
e-mail to e-commerce to emerging technology.
WORKING QUICKLY
The issues involved in a merger of this size are many and complex. Anticipating
the Olympian challenge this posed, the Integration Office met last year with
leaders at other companies who had executed big, successful mergers, and
developed a close working relationship with knowledgeable consultants to develop
an action plan.
According to Central Program Management Office (CPMO) leader Barbara Braun, the
team asked, "How do we set up a process and ensure that everything flows fast,
efficiently and in real time? How do we maintain a really aggressive schedule?"
From its research, the integration team distilled nine basic principles to help
them navigate what the HARVARD BUSINESS REVIEW described as the "often uncharted
territory that the two organizations must cross before they can function as
one." Chief among these guiding principles are:
o Make all decisions with customers in mind.
o Make decisions as quickly as possible and do not revisit them.
o Adopt and go; pick the best of what already exists in the two companies,
rather than try to create something from scratch.
o Maintain a strong, central process linked to the new company's executive
committee.
These principles "help us move quickly and stay on track," says Braun. To
facilitate even faster progress, the CPMO also implemented a capability called
the DECISION ACCELERATOR, via a partnership between PPO's BITS organization and
Deloitte Consulting. "In essence, it's an approach to drive teams to decisions
that stick," says Jim Arena, program manager with the central program management
office. "We've learned that if decisions get put off, and if you don't get
closure along the way, it kills any sense of momentum."
Team members also do their best to ignore outside distractions such as dueling
ad campaigns and news reports on merger-related controversy. "It's remarkable
how resilient we can be to these outside factors," Pete Karolczak says. "We
focus on what we need to get done."
WHEN TO WORK ALONE, TOGETHER
Led by 32-year HP veteran Webb McKinney, the Integration Office is composed of
15-plus post-merger integration (PMI) teams. These teams represent the main
business units of the new combined company -- Imaging and Printing Systems,
Personal Systems, Enterprise Systems and Services -- and a variety of horizontal
business functions including human resources, finance, real estate, supply
chain, information technology and brand integration. Also included are program
specific teams such as Value Capture, Shared Go-to-Market, and Organizational
Design, which span both business and horizontal process/function work.
The Value Capture team is partnering with all of the four businesses, as well as
all of the horizontal function teams for the new company to map out the
financial goals for the merged entity. This work includes identifying how the
new HP will make the most of new resources, and best achieve a projected $2.5
billion in annual savings.
The Shared Go-to-Market team is working to ensure the new HP offers the best
total customer experience across all of our business groups.
Members of the Organizational Design team are focusing on issues such as
reporting relationships, U.S. and international structures, as well as building
a culture that will contribute to the new company's success.
Together, these teams are developing coordinated, short- and long-term plans.
Every week, they coordinate and report their progress to the CPMO, as well as to
the PMI leads who meet every Wednesday.
Members of the CPMO manage the overall integration on a day-to-day basis.
"Through professional and expert facilitation, the CPMO makes sure that the
teams stay on track," says John Bender, program manager for the central program
management office. "We help people focus on the issues that need to be decided
now, which ones need to go to a higher level for ratification, and which ones
can be resolved later."
Every Wednesday, McKinney and Jeff Clarke, Compaq's chief financial officer and
co-lead for integration effort planning, meet with all of the PMI leads to
understand team progress and resolve issues. On Thursdays, McKinney and Clarke
summarize the week's progress and tee up issues needing an immediate decision by
the steering committee, which includes Carly Fiorina, Michael Capellas, Bob
Wayman and Susan Bowick.
Such a process requires both a great deal of independence among teams and their
members, as well as careful coordination. But week by week, the teams are making
steady progress, even when confronting serious differences. "Differences," said
Pete Karolczak, "simply mean you have to navigate differently to get the work
done."
MAKING A CONTRIBUTION
Judy Ash, a 13-year HP employee, looks at her work with the Integration Office
as an opportunity to contribute to the company's future in a significant way.
"I'm energized. I'm contributing to something that is material to our business,
and there's great value for HP," Ash said. "This opportunity is so big for the
company that I'm proud to be a part of it."
Pete Karolczak also noted that the merger work can be something of a roller
coaster, even for the families of those involved. "It's always a little bit
exciting, a little bit frightening and a little bit exhausting."
But nobody's complaining -- there is too much at stake, and the pace of work
will only increase as the shareowner vote draws near. Forging ahead, the
integration team is doing everything possible to make the coming transition a
seamless one for customer and company alike. Just ask, and they'll tell you they
are reinventing HP for the 21st century. And they can't wait to fling open those
garage doors.
* * * * *
WEEKLY MEETING SCHEDULE OF INTEGRATION TEAM
MONDAY:
PMI PROGRAM MANAGERS REPORT OUT TO CENTRAL PROGRAM MANAGEMENT OFFICE
Project Managers from each of the 15-plus post-merger integration (PMI) teams
provide status reports to the Central Program Management Office (CPMO). These
half-hour-long meetings detail the team's accomplishments for the previous week
(which are coded green), as well as those items that are presenting a challenge
(yellow) and those that need special attention (red).
"Team by team, we get detailed reports regarding how individual teams are
progressing and what key issues need to be resolved," said program manager John
Bender.
TUESDAY:
ISSUES RAISED ON MONDAY ARE ADDRESSED AND RESOLVED IF POSSIBLE
The Central Program Management Office (CPMO) facilitates work necessary to
handle the urgent, "red" issues and the most pressing "yellow" issues. This work
continues throughout the week.
WEDNESDAY:
PMI LEADERS FROM HP AND COMPAQ MEET TO ADDRESS ANY ISSUES NOT RESOLVED ON
TUESDAY
Leaders from the 15-plus post-merger integration (PMI) teams meet. Each team is
represented by both HP and Compaq leads. Webb McKinney and Jeff Clarke make sure
issues not resolved on Tuesday get resolved in this forum. Concerns that require
special attention are then logged for discussion and resolution in the steering
committee on Thursday.
THURSDAY:
WEBB AND JEFF MEET WITH MICHAEL, CARLY AND OTHER MEMBERS OF THE STEERING
COMMITTEE TO RESOLVE ANY OUTSTANDING ISSUES
Webb McKinney and Jeff Clarke review team progress with members of the Steering
Committee, which includes Carly Fiorina, Michael Capellas, Bob Wayman and Susan
Bowick.
"That's where the big issues are decided," said Barbara Braun. "Things like
strategy, brand, organizational design, value capture and synergies, as well as
product road maps."
FRIDAY:
PMI TEAMS PREPARE REPORT CARDS AND STATUS REPORTS FOR FOLLOWING MONDAY REPORT
OUT
PMI leads and program managers from each of the 15-plus PMI teams prepare for
the weekly "report card" meeting the next Monday, and the cycle begins again.
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 Merger
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 Merger or other planned acquisitions and the
challenges of achieving anticipated synergies; the possibility that the Merger
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
Merger 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 HP's annual report on Form 10-K, as amended on January 30, 2002,
for the fiscal year ended October 31, 2001 and HP's registration statement on
Form S-4 filed on February 5, 2002.
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 February 5, 2002, HP filed a registration statement with the SEC containing a
definitive joint proxy statement/prospectus regarding the Merger. Investors and
security holders of HP and Compaq are urged to read the definitive joint proxy
statement/prospectus filed with the SEC on February 5, 2002 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 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.