, October 17, 1996 — Joining hundreds of California computer companies, four of the nation’s top high technology companies added their voices today to those who oppose California Proposition 211. Leaders from Microsoft , IBM , Compaq , and Dell warned that passage of the initiative would actually decrease the protections and information available to investors.
“Passage of Proposition 211 will adversely affect all public companies doing business in California, whether they are incorporated there or not, by opening the door to frivolous lawsuits,”
said Bob Herbold, Microsoft’s chief operating officer.
“Proposition 211 would actually hurt shareholders, by making it harder for public companies to attract strong directors, who can manage companies well and protect the shareholders interests.”
Officials from the four companies say they will be forced to severely limit any forward-looking financial statements in order to minimize the threat of frivolous lawsuits in California, unless Proposition 211 is defeated. Currently, it is standard practice for companies to brief financial analysts and reporters on future financial prospects when they release their company earnings results each quarter.
“Investors and shareholders have a right to information about the conditions or issues that could have future implications for the companies they have chosen to invest in,”
said Michael Dell, chairman and chief executive officer of Dell Computer Corporation.
“While we have historically taken a conservative approach to forward-looking statements, we are very concerned about the constraints passage of this proposition would place on our ability to communicate with our shareholders.”
“Proposition 211 would hamper the ability of shareholders to obtain information about the companies that they own,”
said Earl Mason, Compaq’s chief financial officer.
“We are responsible for keeping each of our stockholders around the world informed. After all, they own the company. But when we talk, we weigh their need to know about future plans against the imperative to preserve confidential information in a fast-moving, competitive environment. Achieving the correct balance is extremely difficult — and to perform this task under the burden of Proposition 211 would be next to impossible.”
“Online technology is making it increasingly possible for companies to reach more and more shareholders with real-time, flexible, forward-looking financial information,”
said Mike Brown, Microsoft’s chief financial officer.
“It will be a real shame for the investing public if this important progress is slowed now by passage of a short-sighted, poorly-thought-out local law.”
Proposition 211 will be on the California ballot on November 5. Unless defeated, the measure could significantly increase the exposure to frivolous stockholder lawsuits for all companies with a California presence. For more information about Proposition 211, go to (http://www.tafl.com)
A study by the American Electronics Association found that passage of the initiative could result in the loss of 61,000 high tech jobs in California.
Industry officials point out that sweeping securities reforms were passed by Congress in December 1995 to improve the quality of shareholder communications. These recent federal reforms place reasonable limitations on shareholder class action lawsuits and provide a
to encourage public companies to make forward-looking statements about their business prospects. In California, however, Proposition 211 is being spearheaded by securities lawyers specializing in shareholder class-action lawsuits and is meant to render these recently-enacted federal securities law reforms ineffective.
The measure is opposed by a broad range of high technology companies and trade associations, including Intel, Hewlett-Packard, 3-Com, Novell, the American Electronics Association, and the California Health Care Institute, a coalition of biotechnology and medical devices companies.
In addition, Proposition 211 is opposed by both Bill Clinton and Bob Dole, the National Federation of Independent Businesses, the Securities Industry Association, the National Investor Relations Institute, the New York Stock Exchange, Nasdaq Stock Market, Inc., and many others.
For more information, press only:
Contact: Compaq Computer Corporation, Nora Hahn, (713) 514-8316
Dell Computer Corporation, Cathie Hargett, (512) 728-4100
IBM Corporation, Melinda McMullen, (914) 765-6212
Microsoft Corporation, Mark Murray, (206) 936-3306
Jami Warner or Tina Harris, Taxpayers Against Frivolous Lawsuits, (916) 442-2331
: Founded in 1975, Microsoft (NASDAQ
) is the worldwide leader in software for personal computers. The company offers a wide range of products and services for business and personal use, each designed with the mission of making it easier and more enjoyable for people to take advantage of the full power of personal computing every day.
: Compaq Computer Corporation, a Fortune 100 company, is the fifth largest computer company in the world and the largest global supplier of personal computers, delivering useful innovation through products that connect people with people and people with information. The company is an industry leader in environmentally friendly programs and business practices. Compaq is strategically organized to meet the current and future needs of its customers, offering Internet and enterprise computing solutions, networking products, commercial PC products and consumer PCs. As the leader in distributed enterprise solutions, Compaq has shipped approximately one million servers. In 1995, the company reported worldwide sales of $14.8 billion. Compaq products are sold and supported in more than 100 countries through a network of authorized Compaq marketing partners. Customer support and information about Compaq and its products can be found at (http://www.compaq.com) or by calling 1-800-OK-COMPAQ.
Product information and reseller locations can be obtained by calling 1-800-345-1518.