A new sort of guessing game has begun at

Hewlett-Packard

(HWP)

.

H-P and

Compaq's

(CPQ)

problems are obvious, but their resolutions are unclear. In the month that leads up to the Hewlett-Packard shareholder meeting and its crucial vote, doubts about both companies' businesses will shape their stock prices.

Compaq stock will suffer on fears of continued revenue depletion. And despite an initial rise, Hewlett-Packard's stock will not move solidly to the upside with so many questions about the future of its business segments and its management.

The trouble is simple. H-P CEO Carly Fiorina has to scramble to shore up investor approval outside the influential Hewlett and Packard families, now that both have announced their opposition to the Compaq acquisition, as planned. An independent Compaq will have to jump-start the poor revenue that caused an extremely weak third quarter, punctuated by troubles in its core PC business. Also, Fiorina will be faced with the door, should she and shareholders lack common ground on H-P's direction in her second megamerger attempt at the H-P helm.

As if that wasn't difficult enough, unknowns unsettle the companies' futures even still. For the past two months, customers haven't known whether Compaq will exist much longer if the merger sneaks through, which influences the decisions of big customers who need service and support. Will Compaq's product lines continue, or won't they?

Compaq CEO Michael "Capellas admitted that he thought

Compaq had lost some business because of the merger," says Morningstar's Joe Beaulieu, adding that Compaq may also have gained some accounts because of its connections with HP. "Uncertainty is a bad thing for Compaq. After all, if customers are planning on making large purchases, it matters if the vendor might not exist in its current form six to nine months down the road."

Then again, Beaulieu tempers that assumption with the current IT spending environment. There's not as great a distance to fall, sales-wise, in a difficult market for where "there aren't a lot of customers who have money burning a hole in their pockets," Beaulieu says. He considers H-P shares fairly valued.

On that point, the Hewlett family, owners of 5% of H-P, specifically objected to how the Compaq acquisition would weigh more of the H-P business toward the low-end, thin-margin PC. The Street is debating whether investors could be swayed in favor of the pairing if Compaq shed its troubled computer business, a prospect Compaq is familiar with in a year-long PC sales slump.

Then again, Bear Stearns' Andrew Neff argues that if H-P has to forge ahead on its own, it too should get out of the PC business because of its low returns. The thought of two computing powerhouses considering their PC exits can't help computer sales in an already tough fourth quarter.

Neff considers the PC business $1.50 to $3 of Compaq's per-share price, and $1 to $2 of H-P's stock price. H-P ended Monday trading down 2% to $23, while Compaq fell 14% to $9.70. Neff has a neutral rating on H-P, and Bear Stearns has done banking for the company in the past three years.

Life without the PC business would obviously change the much-touted potential of the companies' services business, and further complicate both companies' turnaround efforts, united or separate. Nobody's sure if H-P or Compaq would sacrifice their PC arms for the sake of the merger, or a more profitable business as standalone entities.

In the meantime, earnings could suffer. Neff warns his clients that "the confusion and uncertainty of customers will likely have a significant impact on H-P's and Compaq's revenues," adding that his quarterly and 2002 earnings estimates for H-P are "clearly at risk."

For the moment, so are several once powerful segments of both companies' businesses.