Hewlett-Packard released a letter to its shareholders Friday, trying to persuade investors of the merits of the company's proposed merger with Compaq, and levelling harsh criticism against Walter Hewlett, the lone merger opponent on the HP board.

It's the latest salvo in the ongoing battle between HP executives who support the deal and objectors to the merger. Hewlett and other members of the Hewlett and Packard families, and organizations with which they are affiliated, have vowed to vote their shares against the merger. The current Hewlett and Packard family dissenters own close to 18 per cent of the company's stock.

HP executives continued to champion the deal with Compaq as a way to improve the company's server, storage and management-software businesses. In addition, HP claims it can save $2.5 billion annually through improved operating efficiency, which would translate into gains of $5 to $9 per share, according to the letter.

Knowledge The letter also attacked Hewlett's credentials as an opinion leader concerning the merger decision.

In the letter, HP said: "Walter Hewlett, an heir of HP co-founder Bill Hewlett, is a musician and academic who oversees the Hewlett family trust and foundation. While he serves on HP's Board of Directors, Walter has never worked at the company or been involved in its management. His motivations and investment decisions are likely to be very different from your own."

HP's own profile of its board, on its Web page, describes Hewlett as "an independent software-developer and chairman, Vermont Telephone Company".

Troubles Hewlett filed his own objection to the merger earlier this week, sending a letter to the shareholders urging them to vote against the merger. He claimed the merger would create a company that is "less focused and more troubled".

Hewlett originally voted in favour of the merger during a board meeting, and then later decided the deal was not in the company's best interest.

HP, however, claims it had already reviewed the items to which Hewlett objected, and decided that proceeding with the deal is still the right action.

One analyst saw this latest attack by HP on Hewlett as a poor decision, saying it makes HP look like a bully attacking "the little guy".

"I think it is a mistake," said Rob Enderle, a research fellow at Giga Information Group, in Santa Clara, Calif: "In the shadow of Enron [the bankrupt US power-giant], people are very suspicious of large corporations. This comes off as a big corporation saying: 'We know better than you.'"