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Tuesday, July 05, 2022
The independent student publication of The Unversity at Buffalo, since 1950

"Compaq Merger Will Not Affect Corporate Commitments, Administrators Say"


Technology giant Hewlett-Packard recently announced its likely victory in the merger over Compaq Computer Corp., but university officials confirmed that Compaq will remain one of the biggest corporate sponsors to UB's Center for Excellence in Bioinformatics. Compaq has pledged over $40 million to the university in computer storage and financial support.

The process of merging has not gone without its speed bumps. Walter Hewlett, a member of one of the company's founding families on its board of directors, initially voted for the takeover, but later filed a proxy vote, which essentially turns over voting of the takeover to shareholders rather than company executives, according to Lawrence Southwick Jr., a UB associate professor of finance and managerial economics.

According to Southwick, Hewlett-Packard CEO Carly Fiornia said a couple of weeks ago that the proxy vote had been successful. "It appears that she may have won; she declared victory," said Southwick.

But Hewlett filed a lawsuit against the company, stating Fiornia had used the purchasing power of the company improperly, according to Southwick. Since the lawsuit, HP's board of directors has publicly criticized Hewlett and made efforts to remove him from the board.

"Hewlett is being thrown off the board," said Southwick. "This is something you don't see too often; it's kind of interesting."

Pending the outcome of the proxy vote and lawsuit, the merger appears likely, but no one is sure when. "I think it's going to look like the last presidential election," said Russ Miller, director of the Center for Computational Research. "It's going to take a good month to six weeks to count all the ballots."

Compaq Public Relations Manager Dick Caladrella could only say that progress for the center "will proceed as scheduled" and that "all commitments will be honored."

Provost Elizabeth Capaldi said the university's partner will be HP and that "only the Compaq name will disappear."

Whatever the outcome, UB officials assure that the merger will have no impact on the university's plans to acquire high-end computer storage systems and chips, in addition to venture capital, from Compaq.

"We're moving full-speed ahead with Compaq," said Miller. "We're very confident in our relationship with Compaq and the people we're working with at Compaq that they'll stay in place whether or not the merger goes through."

Capaldi confirmed the university "will be working with the same people" and that "there will be no change in the part of the organization we work with."

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According to Southwick, these kinds of statements about mergers are not uncommon. "But the result is it makes a lot of difference because the acquiring company usually takes over and runs things its way," he said.

Southwick also pointed to the fact that HP stock dropped almost nine percent the day the merger was announced, indicating uncertainty among investors. "Mergers are not always good," he said, questioning HP's ability to do a better job at running a company that makes microcomputers when their "claim to fame" is largely in printing.

Miller, however, underscored the fact that UB already has working relationships with both HP and Compaq, explaining that the acquisitions from Compaq have no effect on lower-end workstation visualization being done with HP.

"The people in higher education at Compaq that we're working with, there's no equivalent at HP," said Miller. "So there's just no concern whatsoever at the university in the effect of how the merger plays into UB."

The university hopes to receive two major pieces of equipment from Compaq. The first is a large storage area network housing 25 terabytes - 25,000 gigabytes - of online disk and 250 terabytes of tape for backup and long-term data storage. The center is finalizing configurations for the storage network and should be prepared to receive the storage network in 4-6 weeks.

The second is an AlphaServer, a new supercomputer housing 64 "EV-7" computer chips. Built to perform high-end computational science, the server will be one of the fastest in the nation. Its speed will clock in at a teraflop, or 1 million operations per second. UB will be one of the first institutions in the nation to utilize such a powerful computer.

"Preliminary numbers we're looking at from EV-7 are really impressive," said Thomas Furlani, associate director of CCR. "It should be the fastest chip available on its release, so UB will be home to the fastest possible processor."




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