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Filer: Hewlett-Packard Company
Pursuant to Rule 425 under the Securities
Act of 1933 Subject Company: Bluestone
Software, Inc. Commission File No. 000-26613
HEWLETT-PACKARD/BLUESTONE - Q&A
THE PURPOSE OF THE Q&A PREPARED BY HP AND BLUESTONE SOFTWARE IS
TO ANSWER SOME OF THE KEY QUESTIONS YOU MAY HAVE ABOUT THE ACQUISITION
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1. WHAT IS BEING ANNOUNCED TODAY?
HP is announcing that it has entered into a definitive agreement to
acquire Bluestone Software, Inc. Upon completion of the transaction,
Bluestone will become a wholly owned subsidiary of HP. Bluestone and HP
have signed a merger agreement for HP to acquire all of the shares of
Bluestone stock. When the acquisition is completed, Bluestone will
become part of HP's Software and Solutions Organization of Computing
Systems.
2. WHY IS HP DOING THIS?
The HP-Bluestone combination provides a clear win-win for both
companies. HP wants to obtain key technology and software management
expertise that Bluestone has. Bluestone has excellent products.
Bluestone will gain the scalability that HP can provide, with a
rounded-out software product offering, excellent sales and marketing,
and an invaluable brand that will make the technology pervasive.
3. WHY DID BLUESTONE DECIDE TO BE ACQUIRED BY HP?
Bluestone has two great assets - people and technology. HP brings a
rich and broad distribution channel, a platform infrastructure that is
second to none and an implementation environment that will propagate
the leadership technology into the broadest base of customers possible.
HP also has a corporate culture that values innovation and has respect
for employees. The Bluestone executive management team unanimously
agreed that this was the best path forward for the success of the
company, the shareholders and all employees.
4. WHAT IS BLUESTONE'S XML TECHNOLOGY?
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- Bluestone is the industry recognized leader in XML implementations
of key components required in development and deployment
environments of e-services.
- Bluestone has a robust XML application server that supports Java as
well as a full set of XML tools.
5. WHY IS XML TECHNOLOGY IMPORTANT TO HP?
- XML is central to the emerging service-centric computing model, a
new model of computing wherein services dynamically interact with
other services.
- XML is controlled by an independent standards organization, the
W3C.
- XML is emerging as a critical technology for creating e-services
solutions.
- Early on HP recognized the importance of XML in providing the
technology that would enable intelligent conversations, which is
E-Speak. HP has developed SFS, which is XML level APIs. The
industry is now embracing XML as a key technology for delivering
e-services.
6. WHAT OTHER COMPANIES DOES BLUESTONE COMPETE WITH?
- Bluestone provides key components for e-services development and
deployment environments. In the core application server market, the
primary competitors are IBM Websphere, iPlanet Application Server
and BEA Weblogic, as well as several smaller companies such as
Persistence Software, Silverstream Software, and Iona. The
Bluestone product set extends into the application services layer
above the core application server with transactioning, XML and
other services that provide infrastructure components to the B2C,
B2B and wireless markets.
7. HOW DOES IT COMPARE TO SUN'S IPLANET AND IBM'S WEBSPHERE?
- Bluestone has focused their application server offering around XML
services and the next generation of Internet transaction processing
to create a robust, fault tolerant middleware infrastructure for
Internet applications. In testing environments, Bluestone has been
shown to be technologically superior to most other products in the
market, and it has some extremely important features, which are
unmatched in the industry at large.
8. WHY IS THIS ACQUISITION SIGNIFICANT FOR HP?
- HP is committed to being a leading player in key product and
solutions categories in which we choose to compete
- The Bluestone acquisition significantly strengthens HP's software
portfolio by providing the key components required in filling out
HP's middleware and Internet Infrastructure software environments.
- HP believes the combination of HP's and Bluestone's technologies
will put HP in a unique position to provide customized, integrated
solutions and services to help customers quickly and effectively
implement e-services.
9. HP IS A HARDWARE COMPANY. WHY ARE YOU ACQUIRING A SOFTWARE COMPANY?
- On the contrary, HP is an internet infrastructure solutions
provider
- Software is an important component of infrastructure
- HP already offers category leading software technologies such
as...
- OpenView (need updated detail on openview's market share in
networking and systems management/recognition)
- Praesidium (details on market share, awards/recognition)
- WebQoS ... etc.
- In particular, the Bluestone XML application server complements the
E-Services infrastructure provided by HP E-Speak and HP
Changengine.
10. WHAT PERCENTAGE OF BLUESTONE WILL HP EFFECTIVELY OWN? HOW WILL
BLUESTONE BE HELD?
- HP will own 100% of Bluestone.
- Bluestone will become a part of HP.
- Bluestone will play a key role in driving the development and
future strategies related to HP's middleware Internet
infrastructure software solutions.
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11. WHAT DOES BLUESTONE BRING TO THIS RELATIONSHIP?
- Bluestone's Total-e-Business solution is recognized as a leading
next-generation software platform for B2B, B2C, and mobile service
providers.
- Bluestone'S solutions are world-class implementations of Java and
XML-based technologies.
- The Bluestone team has an excellent track record in developing and
managing world-class software businesses.
12. WHAT DOES HP BRING TO THE TABLE FOR BLUESTONE?
- Internet infrastructure software solutions:
- Software that enables the end-to-end infrastructure delivery
capabilities required to support the next generation
Internet... including:
- integrated service management (OpenView),
- security (Praesidium),
- quality of service (WebQoS),
- high availability (MC/ServiceGuard) and
- service tracking and billing (Smart Internet Usage.)
- New technologies for the emerging service interaction model ...
E-speak and Change engine
- Leadership partner and applications portfolio
- A global field sales organization, more than 6,000 consulting
professionals, a large global support organization.
13. HOW DOES THIS ACQUISITION HELP ENTERPRISE CUSTOMERS?
- Most of today's e-business implementations are little more that
automated extensions of traditional processes ... hard-wired
relationships and corporate partnerships forged to meet a common
but predefined goal.
- What if these same business processes could be formed dynamically?
Or what if they could be given a modular dexterity that would
enable the creation of electronic marketplaces in which anyone and
everyone could access and integrate services, on the fly, to
accomplish a task or fill an order?
- With e-services you think of your business as a set of independent
services - email, accounting, inventory management, or HR - that
you enlist and pay for when you need them, not as business
functions with expensive application infrastructures that you must
support and maintain.
- With e-services, you can reach your customers wherever they are -
even when they're on the move - because anything with a chip in it
becomes a platform for the delivery of services.
- In an e-services world, all things become revenue opportunities.
Capital assets. Material assets. A key competency. Know-how.
Experience. A world-class process. They all can be delivered as a
service over the Net to generate new revenue.
- The Internet is moving into a new phase where it can be used to
fundamentally transform business.
- The combination of HP and Bluestone can help enterprise customers
make this e-services world a reality.
14. WHAT ABOUT BLUESTONE'S CUSTOMERS ON NON-HP HARDWARE PLATFORMS?
- HP is committed to building a thriving software business and HP is
committed to open systems ... both of these mean HP's software
solutions should run on all leading hardware platforms.
- HP OpenView, Praesidium, and WebQoS, for example, are available on
multiple leading platforms.
- Bluestone's customers will continue to be supported and can expect
new product versions and releases as they have in the past.
- Bluestone is based on pure Java technology and as such operates as
a single line of code in every environment (because it runs inside
the JVM). The Java Virtual Machine (JVM) architecture allows the
flexibility of continued support, and means that non-HP customers
will be free to pick HP on their next equipment purchase without
fear of delayed releases.
15. HOW WILL THIS AFFECT HP'S RELATIONSHIP WITH ITS OTHER PARTNERS,
ESPECIALLY BEA?
- The acquisition does not affect any other current or future
strategic partner's solutions.
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- HP will continue to make leading solutions available on HP
platforms.
- At the same time, HP needs key XML technologies for creating a
software foundation that will be pervasive across HP's businesses.
- Owning the key technologies gives HP that flexibility.
16. HP HAS SAID PUBLICLY THAT HP BELIEVES THE OPEN SOURCE IS NATURAL AND
INEVITABLE. WILL YOU OFFER UP THIS NEW SOLUTION TO THE OPEN SOURCE
COMMUNITY?
- HP regularly discusses this topic with industry leaders.
- Some technologies are more suited for open sourcing than others.
- HP will continue to evaluate the possibility as the industry
evolves.
17. WILL THIS SOFTWARE RUN ON LINUX SYSTEMS?
- Yes, Bluestone software products run on Linux systems, as well as
other leading operating systems. This is in harmony with HP's
multi-o.s. strategy.
18. WHAT IS THE SALES AND MARKETING STRATEGY?
- There will be no fundamental change in the sales strategy, but
Bluestone products will benefit from the addition of HP's large
sales force to the sales effort.
- The product and customer expertise of the Bluestone sales force
will be a primary resource for the continued success of current
Bluestone products.
- Bluestone technologies will also be integrated into other HP
technologies to broaden HP's product portfolio.
- The marketing strategy will be in line with HP's overall software
strategy.
19. CAN YOU ELABORATE MORE ON ANY JOINT DEVELOPMENT EFFORTS WITH BLUESTONE?
- HP and Bluestone have been working closely together for the last
two years, especially on HP OpenView and Changengine product areas.
- The integration of HP and Bluestone products has demonstrated how
well the companies work together.
20. WHAT KIND OF JOINT SOLUTIONS AND OFFERINGS WILL BE AVAILABLE, AND WHEN?
- We are assessing each company's existing technologies and products.
- We will be releasing products and solutions that take advantage of
the strengths of both portfolios in the near future.
21. WHAT OTHER EFFORTS DOES HP HAVE PLANNED TO COMPETE IN THE SOFTWARE
MARKET? WHEN CAN WE EXPECT TO HEAR MORE ABOUT THESE?
- As HP continues to evolve the e-services strategy there will be a
variety of partners.
- HP will examine the components to ascertain key components HP needs
to own.
22. WHAT IS HP'S STRATEGY WITH REGARD TO INVESTING IN AND ACQUIRING OTHER
COMPANIES? IS IT SIMPLY A "BUY AND INTEGRATE" MODEL?
- As HP recognizes business or technology needs, HP will always be
exploring different models for filling gaps, including inventing,
partnering or acquiring key technologies and solutions.
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23. IS THIS ACQUISITION A SIGNAL THAT HP IS MOVING AGGRESSIVELY INTO THE
MIDDLEWARE SPACE? IF SO, WHY DOES HP THINK IT CAN COMPETE IN THIS
MARKET?
- HP wants to become a leader in next-generation middleware and
recognized that we could strengthen our offerings in this area.
- HP believes the XML technology, the distributed Internet
Transactioning and tools brought by Bluestone will provide a
platform for the next-generation for middleware.
- HP has not only a rich portfolio of software technologies and
products but also has excellent consulting and support
capabilities.
24. RECENTLY, HP MENTIONED THAT IT IS ADDING 2000 NEW EMPLOYEES. DOES THIS
TAKE INTO ACCOUNT THE BLUESTONE EMPLOYEES?
- No, this is not related to Bluestone.
- Last week, HP announced its commitment to add 1,000 sales
professionals and 1,000 technical consultants to the existing field
sales organization.
25. HOW WILL BLUESTONE BE INTEGRATED INTO HP, WILL THIS BE A PART OF THE
CURRENT SOFTWARE & SOLUTIONS ORGANIZATION UNDER BILL RUSSELL?
- Bluestone will be integrated into HP's Software & Solutions
Organization under Bill Russell.
- HP values Bluestone's proven expertise in software development and
management.
- HP expects Bluestone to play an important role in implementing the
e-services strategy.
26. BLUESTONE'S OPERATIONS ARE CONCENTRATED IN THE PHILADELPHIA AND NEW
JERSEY AREAS? ARE THERE PLANS TO CLOSE THOSE AND CONSOLIDATE THE TEAM
IN CALIFORNIA?
- HP will retain Bluestone's facilities.
- HP and Bluestone will minimize employee and business disruption
during the integration.
- HP currently has nearby facilities in New Jersey.
27. PLEASE EXPAND ON THE PARTNERSHIP STRATEGY THAT HP AND BLUESTONE
CURRENTLY HAVE, HOW BLUESTONE'S RELATIONSHIPS WITH OTHER INDUSTRY
PARTNERS MAY BE AFFECTED BY THE ACQUISITION INTO HP.
- Partnerships are an essential part of the success of both Bluestone
and HP; in fact effective partnering is central to the new model of
doing business.
- HP will continue to work with the current partners of both
companies as well as enlisting other key partners in the future.
28. WHAT WILL HAPPEN TO THE BLUESTONE MANAGEMENT TEAM?
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We are pleased to advise you that Kevin Kilroy and some of Bluestone's
key executives have already accepted positions with HP.
29. WHAT WILL HAPPEN TO MY JOB?
We expect the vast majority of the Bluestone employees to join HP once
the acquisition is complete. It may take approximately 2-6 months to
complete the transaction. During this time more communication will
become available to all employees. Until such time business as usual,
we ask that you continue to stay focused on your current goals and
responsibilities.
30. I AM CURRENTLY WORKING WITH AN INDEPENDENT CONTRACTOR AT BLUESTONE.
WILL THEY CONTINUE WORKING ON THEIR CURRENT PROJECT?
Our goal is to have as little negative effect as possible of any
projects underway. Our overall goal is to improve the ability for
everyone to get their jobs done efficiently. There are no immediate
plans to terminate current working relationships with independent
contractors.
31. WHAT HAPPENS IF I AM ON A VISA WITH A WORK AUTHORIZATION FROM
BLUESTONE?
Immediately after the announcement, we will begin to obtain the
necessary information in order for HP's internal Immigration Services
Department to complete the appropriate paperwork to help facilitate a
smooth transition to HP's payroll. You will be contacted directly by an
HP Immigration specialist very soon. HP will cover the required,
necessary expenses.
32. WILL I BE ASKED TO RELOCATE?
Bluestone will remain in its present geographic location. Overlap with
HP people, processes, or centralized services may necessitate some
changes in a few individuals being offered relocation opportunities.
These areas will be reviewed during the transition phase.
33. HOW OFTEN WILL WE HEAR ABOUT WHAT IS GOING ON BETWEEN THE TWO COMPANIES
DURING THIS NEXT MONTH OR SO?
There will be continuous contact between the HP and Bluestone
management teams. You can expect regular communication from your
managers and a detailed communication strategy within a few days.
34. WHAT WILL HAPPEN TO MY BLUESTONE STOCK OPTIONS?
All Bluestone stock options will be converted into HP stock options
will be converted into HP stock options using the fixed exchange ratio
upon the completion of the transaction. Additional information will
be provided to you in the next several days.
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35. WHEN WILL I HEAR MORE ABOUT HEWLETT-PACKARD'S BENEFITS?
You will continue to receive Bluestone benefits with no change until
the transaction has been sealed. In the meantime, HP and Bluestone
are in the process of planning a variety of ways you can receive
more information about HP's employee benefits. There will be Benefit
Overview sessions scheduled and we will provide you with more
information in the next few days. In addition, we are planning a
periodic Q&A document that will be mailed electronically. It should
assist everyone, including the remote employees, with answers to the
most frequently asked questions.
36. WHAT WILL HAPPEN TO MY BLUESTONE'S ESPP?
We will advise you in the next few days what options you will have
under the ESPP.
WE HOPE THAT THIS Q&A ANSWERED SOME OF YOUR IMMEDIATE QUESTIONS. WE WILL
BE COMMUNICATING WITH YOUR REGULARLY OVER THE NEXT SEVERAL WEEKS STARTING
LATER THIS WEEK. IN THE MEANTIME BUSINESS AS USUAL. UNTIL THIS TRANSACTION
CLOSES, YOU WILL CONTINUE TO BE CLASSIFIED AS A BLUESTONE EMPLOYEE AND WILL
CONTINUE TO RECEIVE EXISTING BENEFITS AND COMPENSATION.
WE WILL PROVIDE YOU WITH CONTACT INFORMATION REGARDING ADDITIONAL
QUESTIONS YOU MAY HAVE IN THE NEXT FEW DAYS.
THANK YOU
This script contains forward-looking statements that involve risks,
uncertainties and assumptions. All statements other than statements of
historical fact are forward-looking statements. Risks, uncertainties and
assumptions include the possibility that the market for the sale of certain
products and services may not develop as expected; that development of these
products and services may not proceed as planned; and other risks that are
described from time to time in HP's and Bluestone's Securities and Exchange
Commission reports, including but not limited to HP's annual report on Form 10-K
for the year ended Oct. 31, 1999, Bluestone's annual report on Form 10-K for the
year ended Dec. 31, 1999, and subsequently filed reports. If any of these risks
or uncertainties materializes or any of these assumptions prove incorrect, HP's
or Bluestone's results could differ materially from HP's or Bluestone's
expectations in these statements. Neither HP nor Bluestone intends to update
these forward-looking statements.
Investors and security holders of both HP and Bluestone are advised to read the
proxy statement/prospectus regarding the proposed merger when it becomes
available because it will contain important information about the transaction.
The proxy statement/prospectus will be filed with the Securities and Exchange
Commission by HP and Bluestone. Investors and security holders may obtain a free
copy of the proxy statement / prospectus when it is available and other
documents filed by HP
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and Bluestone with the Securities and Exchange Commission at the Securities and
Exchange Commission's Web site at www.sec.gov. The proxy statement / prospectus
and these other documents may also be obtained for free from HP and Bluestone.
Bluestone and its executive officers and directors may be deemed to be
participants in the solicitation of proxies from Bluestone's stockholders with
respect to the transactions contemplated by the merger agreement. Information
regarding such officers and directors is included in Bluestone's Proxy Statement
for its 2000 Annual Meeting of Stockholders filed with the Securities and
Exchange Commission on March 24, 2000. This document is available free of charge
at the Securities and Exchange Commission's Web site at www.sec.gov and from
Bluestone.
This document is being filed pursuant to Rule 425 under the Securities Act of
1933 and is deemed filed pursuant to Rule 14a-12 under the Securities Exchange
Act of 1934.
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