Posted 5:22 PM by Blah blah

Today was a crucial day (CBS MarketWatch) for Hewlett-Packard here in the Valley, and CEO Carly Fiorina can now take her fingernails out of her mouth. HP management, exhaustively responding to Walter Hewlett's campaign against the HP-Compaq merger, managed to convince Institutional Shareholder Services, which advises more than 700 clients on how to vote on corporate-governance issues (and thus may affect 23% of HP shares), to vote "YES" on the merger. Today in the Mercury News, both Fiorina and Hewlett placed full-page ads in the business section pleading their cases. This drama grows more and more fascinating because Hewlett is, of course, son of William Hewlett, co-founder of HP, and on the HP board with Fiorina. Last week news leaked that Hewlett approached previous CEO Lew Platt, who had chosen Fiorina as his successor in the first place, to take over HP temporarily in case the merger fails and Fiorina is given the boot. Platt sides with Hewlett against the merger.

ISS's statement sounds fair to both sides, and I like it:

In its decision, ISS thanked Walter Hewlett for challenging management at H-P and Compaq to prove how their merger will succeed when other large tech mergers have failed.

But management met Hewlett's challenge, according to ISS. The advisement firm's analysts wrote in their decision, that H-P and Compaq's teams presented "meticulous and exhaustively detailed" integration plans.

"Half a million manhours of work have thus far been devoted to integration planning, which surely makes H-P-Compaq one of the most exhaustively planned combinations ever," according to the ISS recommendation.

The advisory firm also wrote that the merger provides a way to make use of all of H-P's assets. Hewlett's plan, on the other hand, involved spinning out the company' s profitable imaging and printing business, while short-changing personal computers.

"We strongly disagree with the ISS decision," Hewlett said in a statement. "We believe ISS has missed the point -- we believe that the HP-Compaq merger will destroy stockholder value."

In a minor victory, the ISS recommendation seemed to chide H-P's management in its report for painting Hewlett as a, "dilettante who placed casual pursuits above his duties as a director.

"We regard most of management's arguments along this vein as so much noise - whether Mr. Hewlett is a dilettante or not is hardly relevant to the legitimacy of his very serious arguments," the report said.

The ISS analysts went on to praise Hewlett for making public details of discussed compensation arrangements that would have paid Fiorina a total of $63.2 million in the event the merger is completed.

Listen to Carly Fiorina make the case for the merger, on Charlie Rose.