Battling for a brand

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Proxy fights generally are waged with financial spreadsheets, but Hewlett-Packard Co.'s merger with Compaq escalated into a bruising battle over the soul of the HP brand.

Dissident board member Walter Hewlett, scion of the company founder, used traditional methods of hiring a proxy fight public-relations specialist, but added an advertising agency with political savvy, independent Gardner Geary Coll, San Francisco, which had run campaigns for Vice President Dick Cheney.

When HP's ads called Walter Hewlett a "musician and academic," Bob Gardner, agency president, said the gauntlet had been thrown. Still, a personal attack, Mr. Gardner said, would have made Mr. Hewlett's side appear to "just be picking on a girl." Instead, the family relied on the media to take their own cracks at HP's CEO.

HP management believed Mr. Hewlett started the brawl, appearing to the board to support the deal at first, then publicly making his opposition known. "In the end, both sides were shooting away at each other pretty hard," said one executive involved in the campaign. Jeff Goodby, co-chairman of HP's lead agency in the fight, Omnicom Group's Goodby, Silverstein & Partners, San Francisco, however, said, "I'm really proud" of the ad battle, which resulted in, "the largest computer community on earth." He acknowledged, "it's going to take more than some advertising next week" to erase the battle scars. HP declined to comment.

While HP this week steps into the winner's circle, another executive called the war a failure. HP's image "got tarnished by the people who were supposed to protect it," he said. "That never should have happened."

Fortunately, the HP-Compaq marketing tactics are not likely to stick. "Not everyone can spend the millions Walter spent," estimated at about $7 million, said Scott Stuart, senior writer forThe Daily Deal. He said, however, some tactics may become more commonplace for even lesser battles. For example, HP advertised aggressively on Yahoo! Finance, and the fray may have established the use of Web sites as a requirement for any party waging war against management.

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