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As the Hewlett-Packard Co. trial wound down on its third and final day, the fate of the Palo Alto, Calif.-based company seemed just as unclear as when the trial started. Although both sides appeared to score important points, the company’s future will hinge on how Delaware Chancellor William Chandler III interprets evidence that seems to fall mostly in a gray area. Thursday’s proceedings started with the dramatic surfacing of a key piece of evidence. During the first two days of trial, it appeared that the lawyers for Walter Hewlett, who has sued to stop the merger with Compaq Computer Corp., had given up hope of proving their claim that HP executives improperly pressured Deutsche Asset Management to switch its vote. The bank had initially committed to vote all its shares against the merger, then hastily switched its vote on March 19 after a phone discussion with HP management. But hard evidence of coercion wasn’t there. Then late Wednesday, the two sides received letters from Washington, D.C.’s Wilmer, Cutler & Pickering, which represents Deutsche. The Wilmer Cutler lawyers revealed that someone who had participated in the March 19 telephone call had tape-recorded it, and that recording would be made available to both sides. (It was not clear from the court proceedings who made the recording.) Lawyers for Hewlett and the company worked through the night to transcribe and analyze the tape. Then, on Thursday morning, Walter Hewlett’s lead lawyer, Stephen Neal of Palo Alto, Calif.’s Cooley Godward, asked Hewlett-Packard CEO Carly Fiorina to take the stand again in light of this new evidence. The CEO had previously testified she had never suggested to Deutsche that its future business with HP would be affected by how it voted on the proposed merger. Neal confronted Fiorina with her words from the phone call, reading from the transcript: “This obviously is of great importance to us as a company. It is of great importance to our ongoing relationship. We would very much like to have your support here. We think this is a crucially important decision to the company.” When questioned by the company’s lawyer, Boris Feldman of Palo Alto, Calif.-based Wilson Sonsini Goodrich & Rosati, Fiorina explained that she ended most presentations to investors this way. She also insisted that it was “crystal clear” from the transcript that the bank did not interpret her comments to mean that its future business with HP depended on how it voted. Lawyers at Wilmer Cutler, which represents Deutsche, did not return calls asking for comment Thursday. It is not clear why they decided to release the tape to HP litigants in the midst of the trial. Hewlett’s lawyers had more evidence to back up their claim that HP withheld material information from shareholders about problems with its integration plans with Compaq. They showed the court potentially damaging and embarrassing internal documents written by HP and Compaq executives that indicated serious problems with the deal. Still, one weakness in Hewlett’s case is that he never produced testimony from a single shareholder saying that if the negative reports had been known, he or she would have voted against the merger. Chancellor Chandler said almost nothing from the bench and did not signal his views about the relevance of the new information, or about any other aspect of this case. Although it’s not clear whose evidence will be most convincing to the judge, Walter Hewlett’s legal team put on a more dominant performance. From the start, Cooley Godward’s Neal established a commanding presence in the courtroom. His tenacious pursuit of Fiorina on the stand did, however, raise questions about his tactics. He often tested her composure by asking her the same question over and over, trying to get the answer he sought. Whether this dogged approach impressed or annoyed Chancellor Chandler is unclear. At one point the judge commented that he didn’t understand why Neal was “hammering” on a particular point. By repeatedly pressing Fiorina with questions that she refused to answer directly, Neal’s strategy could have been designed to show a pattern of evasiveness: If Fiorina wasn’t being forthright with the court, then perhaps she hadn’t been forthright with shareholders. Hewlett-Packard’s legal team suffered from the lack of a single strong personality. Three lawyers from Wilson Sonsini made appearances during the trial. Of the three, Boris Feldman seemed most effective. He quickly and clearly established important points with his witnesses in a low-key style. Steven Schatz, who handled the opening statement and the cross-examination of Walter Hewlett, came across as nervous and uncomfortable. The third partner, David Berger, was more composed. Following the drama of the past few days, the trial ended anticlimactically. After director Phil Condit made a brief appearance, the trial was over. The two sides did not make closing arguments and instead will submit closing briefs to the court by midnight tonight. The judge indicated he would rule quickly. Susan Beck is a San Francisco-based senior writer for The American Lawyer , an affiliate of The Recorder and law.com.

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