In a mounting shareholders' battle to block the proposed merger between Hewlett-Packard (HP) and Compaq, Walter Hewlett filed papers with the US Securities and Exchange Commission Wednesday highlighting the poor financial performance of the two companies since the merger was first announced.

In the three months following August 31, the last trading day prior to the merger announcement, Compaq's share price has declined 17.8 per cent, from $12.35 to $10.15, HP has seen its stock price fall 5.3 per cent, from $23.21 to $21.99, the filing said. The combined market value of the companies has been slashed by $6.2 billion.

Meanwhile, analyst consensus estimates for earnings per share at both companies for the 2002 and 2003 fiscal years have declined significantly, Hewlett noted in his filing. Compared to forecasts prior to August 31, analysts lowered their earnings per share estimates for Compaq by 77.3 per cent for fiscal 2002, and by 60.2 per cent for fiscal 2003. For HP, analysts lowered estimates 17.1 per cent for fiscal 2002, and 20 per cent for fiscal 2003.

Hewlett, son of HP co-founder William Hewlett, is a board member at HP and has opposed the planned merger, once valued at nearly $25 billion. He hired proxy solicitation advisors MacKenzie Partners in November to aid in his opposition.

Charlie Koons, assistant vice president with MacKenzie Partners in New York, said: "Mr Hewlett has been making his case to a number of Hewlett-Packard shareholders that the merger does not make sense. At this point it's just preliminary."

Hewlett with his two siblings, Eleanor Hewlett Gimon and Mary Hewlett Jaffe, and The William R. Hewlett Revocable Trust, oppose the merger. So does David Packard, the son of company co-founder David Packard.