Hewlett Intensifies Criticism of Fiorina in Conference Call

In his most pointed remarks to date, dissident Hewlett-Packard Co. director Walter Hewlett used a conference call with investors Tuesday to increase his criticism of HP Chief Executive Carly Fiorina and reiterate his prediction that she’ll lose her job if shareholders reject HP’s acquisition of Compaq Computer Corp.

“She has made this merger a referendum on herself,” Hewlett said in his first conference call for all HP investors and the public.

If the $22-billion merger dies and Fiorina goes, Hewlett said he expected to be named to a board committee seeking a successor. He predicted the committee would find a technology firm CEO.

“This time around, we do not want someone learning on the job,” Hewlett said. He added that most senior managers probably would stay at HP.

The escalating rhetoric is a sign of how close the Tuesday vote is expected to be.

Each day is marked by new full-page newspaper ads touting the endorsement or opposition of another expert or investor.

Institutional Shareholder Services last week backed the deal. Since then, two large investors, the California Public Employees’ Retirement System and Wells Fargo Co., have opposed it, though HP said it had most of the largest 20 holders in its camp.

HP took umbrage at Hewlett’s latest remarks, having termed his calls for Fiorina’s post-vote departure “baseless and irresponsible.”

“Unlike many of our competitors, HP has remained profitable under Carly Fiorina’s leadership during this economic downturn,” HP spokeswoman Rebecca Robboy said.

“The HP board, with the exception of Mr. Hewlett, is unequivocal in their support of Carly.”

On the call, Hewlett repeated his core argument that HP is paying too much for Compaq and is essentially trading a stake in its profitable printing business for a bigger piece of the unprofitable and slower-growing PC business.

“Scale alone does not lead to profitability,” said Hewlett, who as the eldest son of HP’s co-founder partially controls a large chunk of the company’s stock.

“If scale was the answer, [No. 3] HP would be less profitable than [No. 2] Compaq” in personal computers, whereas the reverse is true.

Hewlett said the combined company, in winning a No. 1 or No. 2 position in all manner of computer markets, would wind up trying to be all things to all customers, from a supplier of commodity PCs to a high-end systems integrator.

“It’s like a chef trying to simultaneously compete with McDonald’s and Le Cirque,” he said. “It can’t out-Dell Dell and out-IBM IBM at the same time.”

Fiorina said in a conference call for big investors Monday that HP had considered and rejected a wide range of alternatives, including shutting down its PC business.

The board decided against it in part because 25% of the company’s printing products are sold bundled with HP computers.