Fiorina Lobbies For Merger Amid Falling SalesFiorina Lobbies For Merger Amid Falling Sales

While discussing a fiscal year in which sales slipped 7% and profit fell 89%, Hewlett-Packard CEO Carly Fiorina defended the company's proposed acquisition of Compaq. The pitch comes amid doubts from members of the founding Hewlett and Packard families about the $25 billion deal. Fiorina said the merger would help nearly every sector in which HP (HWP--NYSE) competes. She singled out enterprise computing, warning that HP is in danger of "becoming marginalized" in a market with fewer vendors, and that Compaq will help bolster HP's position in the markets for servers, IT support, PCs, and storage.

The numbers support Fiorina's concerns: HP's printing unit slipped 9% in sales for the year yet provided the bulk of the company's profit, while its computing division sales fell 31% and lost money. However, that fact also relates to the opponents' major objection to the deal--that it aligns HP's future more closely to money-losing PCs rather than its money-making printers. Overall for the year, HP revenue slipped to $45.23 billion and net income sank to $408 million. For the quarter ended Oct. 31, revenue fell 18% from a year ago and net income dropped 89%.