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 an article posted on HP's internal web site.
THE FUTURE OF I.T.
BY MICHAEL LYNBERG
Predicting just how different the future will be, and what will lead the change,
is a matter that should be approached with caution and humility. Just ask the
author of the 1999 best-seller, DOW 36,000, or the guys who wrote the recently
published, RADICAL E: FROM G.E. TO ENRON, LESSONS ON HOW TO RULE THE WEB.
More recently, the unveiling of "Ginger" -- touted as one the greatest
inventions of our time -- reinforced my belief that predicting the future and
trying to determine which trends and inventions will profoundly impact our lives
is fraught with uncertainty and subject to the hype and overzealous
prognostications of people who might have a stake in a certain outcome.
UNVEILING "GINGER"
Steve Jobs said Ginger was as big as the invention of the PC. John Doerr,
notable Silicon Valley venture capitalist, said it might be bigger than the
Internet.
Ginger's inventor, Dean Kamen -- who has more than 100 patents to his name,
including for the coronary stent that has eased the flow of blood in one of Vice
President Cheney's arteries -- said that Ginger "will be to the car what the car
was to the horse and buggy."
Like many people, I eagerly tuned into the "Good Morning America" show on the
morning of December 3, 2001, for the unveiling of Ginger. What I saw amazed me.
Not because it was a groundbreaking work of staggering genius, but because it
was a scooter -- a scooter that looked a little bit like a push lawnmower in an
upright position.
The Segway, as it is now called, with its computerized gyroscopes and
ease-of-use looked like it would be a fun toy to have in a better economy. It's
easy to see how it would be useful to mail carriers and policemen -- two of its
test markets -- but I just couldn't see its revolutionary applications.
But, in predicting the future, we can be blindsided by events and developments
that we cannot foresee. For example, there was Thomas J. Watson's famous 1943
decree that there would be a world market for perhaps five computers.
Then, in the March 1949 edition of POPULAR MECHANICS, an article described a new
supercomputer named Eniac. The article's author knew that the invention was the
beginning of a glorious future. "Where a calculator like the Eniac today is
equipped with 18,000 vacuum tubes and weighs 30 tons," he wrote, "computers in
the future may have only 1,000 vacuum tubes and weigh only 1.5 tons."
PREDICTING THE FUTURE
The future doesn't just happen, it is made to happen, or it is created, as Gary
Hamel and C.K. Prahalad argued so compellingly in COMPETING FOR THE FUTURE. The
future is created by visionary companies and individuals with the courage to
stand by their convictions and pursue a unique vision.
So rather than try to predict the future, try examining "trends and indicators
of possible future developments without predicting a single state or timeline,"
something RAND, a nonprofit research organization, calls "foresight activity."
LONG-TERM TRENDS
A recently published study by RAND, THE GLOBAL TECHNOLOGY REVOLUTION:
BIO/NANO/MATERIALS TRENDS AND THEIR SYNERGIES WITH INFORMATION TECHNOLOGY BY
2015, states that "beyond the agricultural and industrial revolutions of the
past, a broad, multidisciplinary technology revolution is changing the world."
With information technology already revolutionizing lives, especially in the
developed world, the study contends that breakthrough materials and
nanotechnology will yield even more astonishing results.
The study explores several fascinating possibilities relevant to technology
including:
SMART MATERIALS -- These are materials with sensing and actuation capabilities
that can respond to environmental conditions. For example, clothes might be able
to interface with information systems and respond to changes in the weather; or
if you were sick or injured, your clothes would deliver medications and protect
wounds.
NANOFABRICATED SEMICONDUCTORS -- For decades there has been a trend toward
producing devices that are smaller yet more powerful.
Nanotechnology is the science and technology of building electronic circuits and
devices from single atoms and molecules. These smart devices could make low-cost
computing more available and could foster the development of ubiquitous embedded
sensors in consumer products and appliances. For example, semiconductor "quantum
dots" might be able to travel through your bloodstream, scanning for disease; or
released as a cloud of smart dust to monitor the weather and environment.
While RAND notes that "the odds-on favorite for the next 15 years remains
traditional electronic computers based on semiconductor technology," the
question is how long that will last. Progress is already being made in nano and
other alternative technologies, including at HP.
HP Fellow Stan Williams, HP Labs director of quantum science research, and HP
Labs scientist Phil Kuekes, were recently issued a patent for molecular crossbar
memory, and MIT's TECHNOLOGY REVIEW magazine named one of HP's patents as one of
the "five patents that will change business and technology."
INTEGRATED MICROSYSTEMS -- Related to and potentially influenced by
nanotechnology, integrated microsystems will make use of chemical, optical,
mechanical and even biological components to create computational logic in
commercial chip designs. In other words, advances in manufacturing and
fabrication techniques will make it possible to integrate computational systems
-- mechanical, electrical systems and memory -- on the same chip. These chips
are likely to become smaller and more ubiquitous, acting as single-chip
measuring devices and analytical tools.
While autonomous, microscopic devices are long-term possibilities,
Internet-on-a-chip devices are already being developed. "For a device to link to
the Internet, it generally needs some kind of processing intelligence nearby --
a PC, a laptop, a Palm, a cell phone," reports DARWIN MAGAZINE. "But that's
changing. Technology companies are concocting low-cost methods for getting on
the Internet -- in essence, building the basic communications protocols of the
Internet onto low-cost semiconductors."
The use of these Net-ready tags is limited only by our imaginations. For
example, they could become part of inventory control, wirelessly broadcasting
information so that inventory data -- in warehouses, supermarkets and stores --
is gathered automatically and in real time. Each tag could also have complete
information about the date and place of manufacturing, and they could be used to
limit errors in shipping and to prevent theft. Such devices could also be used
to monitor water quality at a water treatment plant, a patient's vital signs at
a hospital, or the mechanical soundness of a car, as illustrated in a Cooltown
vision video.
THE FUTURE IS HAPPENING NOW
Business Software Alliance's 2001 survey of member-company CEOs (including
Intel, Microsoft, IBM and Apple) concluded that, "the proliferation and
sophistication of technology will continue to grow at an astonishing pace, with
Internet access in the developed world becoming essentially universal." The CEO
survey concurred that by 2010, the citizens in developed nations will be in
constant contact with the Internet.
Compaq's Michael Capellas believes that the HP-Compaq merger will position the
combined company to both capitalize on and create this future trend. "It's all
about creating the next generation of consumer Internet experience," commented
Capellas at a December 4 broadcast to HP employees. The merger, says Capellas,
is largely about "the next generation of the consumer's complete Internet
experience and the next generation of Internet access."
Dick Hackborn, HP board member and retired HP executive, has said that among
many potential advantages of the HP-Compaq merger, the combined company will be
able "to capitalize more on the Internet and where it's going. Between the two
companies we have some good programs and I think if we put them together we're
going to be a bigger force in terms of the Internet world. But there's something
else about the merger that I think is even more important -- I think it gives us
the opportunity to develop some more effective business organizations."
SHORT-TERM INTERNET TRENDS
Experts believe that several short-term trends will lead to the Internet being a
pervasive part of our lives, among them:
WIRELESS TECHNOLOGY -- Wireless is talked about a great deal these days, and
while it is now limited mostly to cell phone use, one day it will become
ubiquitous, allowing us to access the Internet from almost anywhere at anytime.
"Arguably it will change business more than anything else since the advent of
the Internet," reports DARWIN MAGAZINE.
According to the Strategis Group (as reported in FORTUNE magazine), about 2
percent of Americans now own devices that can access mobile data, but by 2007,
59 percent will own them. Moreover, within the next several years, experts
believe that new-generation wireless devices will enable high-bandwidth
streaming of multimedia applications, including video.
Already, wireless local networks (WLANs) are beginning to appear. Soon you will
be able to go into a local cafe, order a cup of coffee, and access the Internet
with your laptop -- without plugging in. You'll just pop an access card into
your computer and it will wirelessly connect with networking device hidden away
somewhere in the store.
Starbucks plans to install these types of devices in all of its stores in the
next five years and universities and corporations are already installing the
equipment in conference rooms and libraries.
DATA CENTERS -- In order to facilitate the growth of the Internet, many foresee
the development of large and centralized data centers. According to RED HERRING,
these data centers "will transform the downtrodden Web-hosting business into an
entirely new industry. The vision: highly advanced data centers will become
critical hubs for Internet communications and accelerate the acceptance of
merging technologies like real-time computing [and] the wireless Web."
These data centers will offer computing-on-tap -- customers will pay only for
the computing power that they use, in the same way that they purchase electrical
power or phone time right now. The data centers will rarely, if ever, fail and
unlike today's Internet infrastructure, they will feature the latest equipment
and technology. HP's Richard Friedrich, quoted in the RED HERRING feature, says
that data centers, in effect, will provide "infrastructure on demand."
When a business needs greater storage or processing power (for example, retail
websites around Christmas time) they can simply order extra computing when they
need it. The data centers can be connected, like a power grid, and one center
can provide extra computing power for another during its non-peak hours.
THE GOLDEN AGE OF INFORMATION
Joel Birnbaum, HP's Chief Scientist, has called where we are today the Golden
Age of Information -- a technology revolution that is faster moving, more
turbulent and due to have a more widespread impact than any period that has come
before it.
"The Internet changes everything -- we've been talking about that at HP for
two-and-a-half years. We've been talking about the fact that this is a new game,
that the pure product era is over, that it is all about the Internet, it's all
about solutions, it's all about making sure that we understand how to create
industry standard platforms, open architectures, solutions that a whole industry
can embrace," said Carly Fiorina in a December 4 broadcast to HP employees. "The
question is, do we want to lead those changes or do we want to be shaped by
them?"
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Michael Lynberg is a Senior Associate of ROI Communications, Inc., and the
author of eight books, including the recently published MAKE EACH DAY YOUR
MASTERPIECE.
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References
Birbaum, Joel, "The Golden Age of Information," Keynote address, IEEE Corporate
recognition event, September 26, 2000
Business Software Alliance, "Confident of Technology's Future: Executives Look
Ahead," December 2001, p. 5
Fortune,"10 Tech Trends to Bet On," March 19, 2001, p. 76
Garreau, Joel, "The Invention That Runs On Hype," The Washington Post, December
4, 2001, p. C1
Gralla, Preston, "Five Live Ones," DARWIN MAGAZINE, August 2001, pages 69-78
Harrison, Ann, "5 Technologies You Need to Know," BUSINESS2.COM, pages 46-56
Johnson, George, "This Time, the Future Is Closer Than You Think," THE NEW YORK
TIMES, December 31, 2000, p. 4.1
Leland, John, "Was That the Future We Just Passed By?" THE NEW YORK TIMES,
December 9, 2001, p. 5
Malik, Om, "Data Central," part of "Ten Trends for What's Ahead," RED HERRING,
November 2001, pages 47-66
RAND National Defense Research Institute, The Global Technology Revolution:
Bio/Nano/Materials Trends and Their Synergies with Information Technology by
2015, Santa Monica, CA and Arlington VA, 2001, p. 1 and 28
Rich DeMillo's keynote address, "The Next Computing Shift," HP World, Chicago,
August 23, 2001
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 the annual report on Form 10-K for the year ended October 31,
2000 and HP's amended registration statement on Form S-4 filed on January 14,
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 January 14, 2002, HP filed an amended registration statement with the SEC
containing an amended preliminary joint proxy statement/prospectus regarding the
Merger. Investors and security holders of HP and Compaq are urged to read the
amended preliminary joint proxy statement/prospectus filed with the SEC on
January 14, 2002 and the definitive joint proxy statement/prospectus when it
becomes available 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 will be
sent to the security holders of HP and Compaq seeking their approval of the
proposed transaction. The amended preliminary joint proxy statement/prospectus
filed with the SEC on January 14, 2002, 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.
HP, Carleton S. Fiorina, HP's Chairman of the Board and Chief Executive Officer,
Robert P. Wayman, HP's Executive Vice President, Finance and Administration 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 shareowners 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 Shareowners, which was filed with the SEC on
January 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 amended preliminary joint proxy statement/prospectus filed with the SEC on
January 14, 2002 and the definitive joint proxy statement/prospectus when it
becomes available.
Pursuant to an engagement letter dated July 25, 2001, HP retained Goldman, Sachs
& Co. ("Goldman Sachs") to act as its financial advisor in connection with the
Merger. In connection with the engagement of Goldman Sachs as financial advisor,
HP anticipates that employees of Goldman Sachs may communicate in person, by
telephone or otherwise with certain institutions, brokers or other persons who
are shareowners for the purpose of assisting in the solicitation of proxies in
favor of the Merger. Although Goldman Sachs does not admit that it or any of its
directors, officers, employees or affiliates is a "participant," as defined in
Schedule 14A under the Securities and Exchange Act of 1934, as amended, or that
Schedule 14A requires the disclosure of certain information concerning them in
connection with the Merger, Gene Sykes (Managing Director), Matthew L'Heureux
(Managing Director), George Lee (Vice President) and Jean Manas (Vice
President), in each case of Goldman Sachs, may assist HP in the solicitation of
proxies in favor of the Merger.
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 shareowners 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 Shareholders, which was filed with the SEC on March 12, 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 amended preliminary joint
proxy statement/prospectus filed with the SEC on January 14, 2002 and the
definitive joint proxy statement/prospectus when it becomes available.
* * * * *