This is a partial transcript from Your World with Neil Cavuto, March 6, 2002. Click here for complete access to all of Neil Cavuto's CEO interviews. 

NEIL CAVUTO, HOST: Point, set, match. Carly Fiorina still basking in the glow of what appears to be a huge victory. A large investor, Institutional Shareholder Services, says that it will vote for Hewlett-Packard's (HP) bid for Compaq (CPQ). That could grease the skids for others doing the same. No wonder when I caught up with the HP boss, she was upbeat.


CARLY FIORINA, CEO, HEWLETT-PACKARD: Well, it's an important vote of confidence. There's no question. We have two weeks to go in to vote. So I'm certainly not declaring victory yet, but it's a vote of confidence from an independent expert that spent many months evaluating this merger, an independent expert that's evaluated literally 10,000 mergers.

And so, when they come out and say the strategic logic is compelling, the economics are real, yes, they can execute and have a great implementation plan and their board of directors used appropriate governance in an evaluative process, we think that's really important.

CAVUTO: So, Walter Hewlett looked at it as, I'm sure you're not too surprised, and said that ISS clearly has a predisposition to support management and makes a general presumption that boards do the right thing. So, is it a surprise?

FIORINA: Well, look, at one level no, for us it is not a surprise. We have brought this merger to shareowner vote because we are absolutely convinced that on the substance of the case, on the merits of this case, this is a compelling proposition for shareowners. We wouldn't be taking it to shareowners if we didn't believe that. And so, of course, we have confidence in this case. So in that sense, it's not a surprise.

On the other hand, I think it does a disservice to ISS to say they merely follow management. I mean, this is an organization that has, as I mentioned earlier, evaluated 10,000 mergers and they also spent three months evaluating this case. They spent a great deal of time with our opposition as well as with us. They did their own independent assessment. And so, I think they are clearly qualified to have made this judgment.

CAVUTO: Now they, of course, can influence a lot of other institutions as well. Have you heard any rumors that others are likely now ahead of the vote on the 19th to indicate their support?

FIORINA: Well, you know, in the normal course of a proxy contest, although this one hasn't been normal in many ways, but in the normal course of a proxy contest, people don't announce their votes ahead of time. In fact, most institutions wait up kind of right up to the last minute to actually complete their own voting processes, which in some case are quite complicated. So I don't necessarily anticipate any more preannouncements. It would be unusual for there to be any.

CAVUTO: Now, are you surprised that Walter Hewlett has apparently talked to your predecessor, Lou Platt, you know, almost that he was apparently arranging a coup? What do you think of that?

FIORINA: Well, I think our independent board members have expressed their outrage at this action by a board member, which is clearly disrespectful to the rest of the board. And...

CAVUTO: But, Lou Platt has not actually shooed them away. I found that interesting, too.

FIORINA: Well, you know, this is not a company that can retreat into its past. This is not a company that can go backwards. This is a company that has to go forward. And that is what this board of directors is committed to do. That is what the management team is committed to do and that is what this merger is all about, going forward and leading in a high-technology industry that will continue to change rapidly.

CAVUTO: I don't mean to badger this issue here, Carly, but were you surprised that Lou Platt did not just say, no, no, no, not interested, leave me alone?

FIORINA: Well, you know, I can't explain the motivations and the decisions of other people. I truly can't, so I won't try.

CAVUTO: OK. Let me get your sense of what the FTC could do. The Federal Trade Commission could weigh in on this, what, in a matter of days, right? Any early indications where they stand?

FIORINA: Well, you know, one of our practices throughout this has been that we don't publicize or politicize the regulatory process. We kept very quiet on the European Union's decision and we'll continue to stay quiet on the FTC process until they are ready to publicize their own decision. It's their job to do so, so we'll wait.

CAVUTO: Let me ask you this. If indeed you win this, as many analysts say now, given the ISS move yesterday, looks increasingly likely, still early to say, would you welcome Walter Hewlett back on the board.

FIORINA: Well, Walter Hewlett is a member of the board today. We have a policy where we reelect board members annually. And so annually, the nominating committee takes up the question of what the slate of directors should be.

CAVUTO: Would you recommend him?

FIORINA: Well, that's not my place. The nominating committee gets together and make that decision and at the appropriate time, they will consider that. They have not considered that subject as yet.

CAVUTO: But the rest the board is kind of ticked off at the guy, aren't they?

FIORINA: Well, this has been a very difficult set of circumstances. This is a board of directors that has spent two-and-a-half years evaluating a set of alternatives, as Walter well knows. This is a board of directors that examined this alternative with incredible care, as ISS reconfirmed. This is a board of directors that unanimously voted in favor of this transaction. And so, of course, it is very surprising and disturbing when two months after this merger is announced, a single board member comes out and wages a public proxy contest.

CAVUTO: Because it would just sound to me — and this is my final point — that if he were on the board with you and all the bad blood, it would just be weird, wouldn't it?

FIORINA: Well, I think boards of directors are used to dealing with sometimes difficult situations. But this situation clearly has been unexpected and quite difficult, and our independent board members have had to set the record straight as regards our opposition several times and they do not do that lightly.


CAVUTO: All right. Carly Fiorina who heads up Hewlett-Packard. Again, that crucial vote on the Compaq merger is slated for March 19. Again, her odds looking decidedly better today.

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