Fiorina turns to small investors for support

"My secretary said Carly Fiorina was on the phone. At first, I thought it was a female friend who was playing a joke on me. But after the third sentence, I realized it was her," said Dodson, whose Parnassus Investment fund was heavily leaning toward voting its 170,000 shares against the proposed merger with Compaq Computer.

"I was sort of stunned. She said she had read some of my comments (in the press) and wanted to talk to me."

Dodson and his crew were set to make a final decision on voting their shares Friday when the timely call came from HP's chief executive. Now, Dodson says he's on the fence, with a final decision put off until Thursday.

The call from Fiorina is just another sign of how tight this contested proxy battle has become, with the CEO reaching out to even the smallest of institutional investors. In addition, Compaq and HP are spending millions of dollars on full-page ads in national and regional newspapers in an attempt to reach individual investors, who hold about 25 percent of HP outstanding shares.

HP shareholders will vote on the $22 billion merger next week, setting the stage for what can become the largest technology merger in history and one that could dramatically alter one of Silicon Valley's oldest icons.

HP declined to discuss conversations with individual investors, but pointed to its proxy material, which states HP management, board members and representatives may contact investors to discuss the merger's merits, said Rebeca Robboy, an HP spokeswoman.

One source familiar with the company, however, acknowledged Fiorina made the call to Dodson.

In a conference call with the press last week, Fiorina said the company has met with a majority of its large shareholders, but will continue with more meetings in the final two weeks.

"We're not taking anything for granted," Fiorina said. "We will continue to make our case to shareowners every day between now and the vote."

During the course of Dodson's 45-minute call, he discussed his two primary reasons for leaning against the merger: the dilution to HP's highly profitable printing and imaging business, and the difficultly in integrating two large companies.

"She was a good listener. She didn't try to cut me off when I talked," Dodson said. "Then, after I finished, she talked and I listened to her and she was very persuasive. She got to the point and didn't ramble. She was incisive and raised some points that I didn't consider."

Before speaking with Fiorina, Dodson said he felt his company had enough information to make a decision. After all, Parnassus had met with financial advisers teamed with dissident director Walter Hewlett, who opposes the merger, and his company had heard Fiorina speak at a Southern California investment conference earlier this month.

A representative for Hewlett said Dodson had been offered a meeting with Hewlett, but declined because the fund had enough information to make a decision.

"When I met with (Hewlett's) representatives, they asked me how I planned to vote. I told them I was leaning against the deal but wanted more information. They didn't pressure me, and neither did Carly. She made some persuasive arguments but never asked how I would vote in the end," Dodson said.

For Dodson, it seems the squeaky wheel gets the grease. A number of years ago, when the portfolio manager was in the news complaining about his fund's underperforming Apple Computer shares, he received a call from then Chief Executive Michael Spindler.

"He called me up and talked to me. He rambled on and was not very persuasive. When I compare the two CEOs, it's like night and day," said Dodson, adding with a joke, "With this new information, it's going to cost me a lot more work now."

Fiorina has her work cut out as well. Although two HP directors indicated in a conference call with analysts and press Monday that they believe they have support from most of their top 20 institutional investors, Hewlett's camp is skeptical with that assessment.

One large investor, California-based bank Wells Fargo, announced its proxy committee has decided to cast its 6.8 million HP shares against the deal. A Wells Fargo representative declined to elaborate on the reasons for opposing the merger.

Hewlett, members of his family and the Packard family, their trusts and foundations, also plan to vote against the deal. The combined groups represent roughly an 18 percent stake.

News.com's Stephen Shankland contributed to this report.