Investors aren’t buying HP’s Compaq plan

Associated Press
Thursday September 06, 2001

SAN JOSE (AP) — Investors pounded the stocks of Hewlett-Packard Co. and Compaq Computer Corp. to 52-week lows Wednesday, showing that Wall Street has yet to be convinced HP’s acquisition of Compaq is a good idea. 

HP shares lost 4 percent, or 79 cents, to $18.21 on the New York Stock Exchange. The price has fallen 22 percent since its stock swap with Compaq was announced, dropping the value of the deal from $25 billion on Monday night to $19.5 billion now. 

Compaq’s stock, down 16 percent since the deal was announced, fell 67 cents Wednesday to $10.41. 

The acquisition still must be approved by regulators, and shareholders of both companies. But Bear Stearns analyst Andrew Neff said Wall Street’s initial reaction to the deal in no way means shareholders are likely to shoot it down. 

“I would say the chance of Compaq shareholders vetoing this is low,” he said. “They needed to do something.” But he added that HP and Compaq still need to “go out and try and sell this.”