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Wed, Mar 20, 2002 - Page 19 News List

Tally in H-P vote may not be known for weeks

Because investors can change their vote as many times as they want before the last ballot is cast, it may take time before the result of a vote on the H-P, Compaq merger is known

AGENCIES , CUPERTINO, CALIFORNIA

A Times Square billboard made the case on Monday for Hewlett-Packard's acquisition of Compaq in grand conceptual terms.

PHOTO: NY TIMES

Hewlett-Packard Co must wait more than two weeks for an official tally of investor votes on the proposed US$20.8 billion purchase of Compaq Computer Corp, according to IVS Associates Inc, which is counting the votes.

Shareholders of the world's second-largest computer maker met yesterday in Cupertino, California, to vote on the acquisition.

Director Walter Hewlett has been soliciting proxies against the purchase, and analysts say the vote is too close to call. With 900,000 shareholders and 1.94 billion shares outstanding, there may be no clear winner until every vote is counted.

"We will not have the preliminary votes counted in two weeks," said Michael Barbera, a partner in Newark, Delaware-based IVS. The computer maker or Walter Hewlett may announce the results before IVS makes its official ruling on the vote, he said.

Walter Hewlett says the purchase of Houston-based Compaq, the third-largest computer maker, would dilute Hewlett-Packard's profit. Chief Executive Carly Fiorina has said the deal would increase sales of more profitable servers, storage devices and services, making the company more competitive in the corporate market.

Investors controlling more than 22 percent of Hewlett-Packard shares have said they'll vote against the purchase. Shareholders owning 8.9 percent have said they're in favor of it.

The meeting yesterday marks the deadline for Hewlett-Packard shareholders to vote on the deal. At the meeting in Cupertino, IVS was to collect the proxies and ship them to its offices to be counted. Barbera declined to say whether they will be sent by truck or airplane. "I don't want anybody following it," he said. "That's happened before."

About 25 IVS employees will count the ballots. Each ballot is filed alphabetically. That makes it easier to keep track of investors that have switched their votes by submitting new proxy cards. Only the last one counts, Barbera said.

"If John Adams sends in 10 cards, we want to get them all together to see the latest card," Barbera said. "It's done one at a time. It's very tedious and time-consuming."

After the first count, a preliminary result is announced.

Then both sides are able to review and challenge ballots. IVS inspectors will rule on the challenges, Barbera said.

Once the ballots are sorted, it's unlikely there will be any confusion about how each shareholder meant to vote, he said.

"We're not talking about chads," he said, a reference to Florida ballots that were questioned in the 2000 US presidential election. "It's very clear what the voter's intention is."

Typically, fewer than 5 percent of shareholders change their votes, he said. Some Hewlett-Packard shareholders have received 10 or more appeals for their vote in the mail. Investors can vote as many times as they want, switching sides repeatedly, but only the last vote counts.

Such detailed vote-counting, Barbera said, is done by hand with proxies counted in piles on row upon row of tables. IVS is renting extra office space and hiring additional workers for the challenge.

Late ballots

Institutional investors tend to wait until near the closing of polls to vote their shares. If a clear result is evident in the Automatic Data numbers, a winner could be declared soon. But most indications are that the Hewlett-Packard proxy fight is extremely tight, which is why it may take weeks to determine a winner.

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