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With three weeks remaining, a clearer picture of how


shareholders will vote on the proposed merger with


is emerging.



has not been able to officially discuss the number of institutional shareholders that it believes it has swayed in favor of its acquisition of Compaq


. But names are popping up of big investors who have preannounced their intended votes.

With family members and family institutions lining up 18% of the shares against the merger, it means proponents need to win more than 61% of the remaining shares before the March 19 vote. That makes the contest much tighter, and puts heavy emphasis on the recommendation in the upcoming report from the Institutional Shareholder Services research firm, which is estimated to count 20% of H-P's institutional owners among its clients.

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"Obviously it seems as though momentum is on the side of Compaq and HP," Lehman Brothers analyst Dan Niles argues. "ISS is going to be a crucial swing factor. Right now it seems as though they should come out in support of the merger. That's my sense of it, but not something that's a lock."

The Packard Foundation in December voted its 10.4% of H-P shares against the deal and the Hewlett Foundation did the same with its 1.88%. Other key holdings bearing the family names include the Hewlett Irrevocable Trust, with its 3.75% slice; the Packard Humanitarian Institute's 1.33%, and Walter Hewlett's 0.15% individual kitty. Altogether, the group controls about 18% of H-P shares.

Management is believed to hold about 1% of shares, and employees and retired H-P workers have another 3% stake.

The top 15 independent institutional investors account for 30% of the company's shares. Alliance Capital is the biggest announced proponent, deciding in January that it would throw its 2.34% of shares behind the deal. Compaq CEO Michael Capellas has said in published reports that he believes No. 4 Putnam Investment Management will add its 2.53% stake to the merger approval side.

Meanwhile, Brandes Investment Partners at the No. 12 slot has said it opposes the joining of the two technology companies and will vote against the merger. Barclay's Global Investor is the largest institutional holder that has said it will let the ISS's recommendation guide its 3.1% chunk, because CEO Patricia Dunn is on H-P's board.

H-P undoubtedly believes it has work to do, as it scrambles to sway reporters, employees, fund managers and analysts. H-P delivered a fierce defense of its proposed acquisition of computer maker Compaq on Wednesday at its gathering of analysts. The meeting capped off weeks of combative advertising, attacks against dissenting board member Walter Hewlett, refutation of employee polls underwritten by David Packard, management pitches to employees and investor road shows.

Board member Walter Hewlett and David Packard have been working just as hard, throwing considerable time, effort and money into a proxy fight that will culminate when shareholders voice their opinions.

"Proxy contests like this are pretty unusual. First, by the time a deal gets to these (shareholder) votes, the controversy is already resolved somehow, some way," explains Dennis Sheehan, Benzak Professor of Finance at Penn State's Smeal College of Business. Sheehan believes that Hewlett can exert unusual influence in the fight because he is a son of a company founder, a large shareholder and a board member, not to mention because he can take on the costs of the fight.

"If you're an institutional shareholder, you have to be asking 'Do we make anything out of this deal?'" Sheehan said. "Board members and presidents are replaceable. Do I care whether Fiorina is president or Hewlett stays on the board? Nah. There's nobody you can't replace. It's the returns."

Hewlett has issued numerous reports to shareholders backing his view that the deal would focus H-P on the low-end computer business. Packard employed the Field Research firm to poll employees at two H-P facilities, highlighting results that showed the majority of those employees disapproved.

H-P touted similar results in its favor in an official December employee poll, though respondents did not give their assent by an overwhelming margin. H-P shares have dropped 14% since the merger with Compaq was announced in the fall, despite a January rally that saw them climb to previous levels.