Compaq Message Board - Msg: 12029540

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Technology Stocks : Compaq

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To: rupert1 who wrote (72506)	11/21/1999 10:40:00 AM
From: rudedog	Read Replies (1) of 97611

victor - re: I think Rosen sold AV because he was overwhelmed by COMPAQ's problems not because selling it was better than floating it. I disagree for a couple of reasons. First, Rosen is mostly a strategic thinker, with little experience as an operational guy, and as a result he used the other board members on the "triad" to make almost all of the operational decisions. Capellas was obviously in the driver's seat on operations within weeks of Pfeiffer's ouster. So Rosen had only his original strategy issues to consider. Little in that basic strategy changed from fall of 1998 to the present. So there was clearly not a lot of "mid-course correction" going on. According to folks in the know at MSFT, there were discussions about selling AV to MSFT even before the DEC acquisition was closed. The scuttlebutt says that Rosen (along with Rod Schrock) were pushing hard for the sale, Pfeiffer was putting on the brakes. Recent statements in the press by Pfeiffer confirm this. AV created a much bigger problem for CPQ than just the expense of running it - the things needed at AV would have created a CPQ business which competed directly with the customer base that CPQ wanted to attract in the future. From a strategy standpoint, it was probably important to eliminate that conflict early on. The close linkage with CMGI and related portal plays are IMHO just typical Rosen making lemonade out of the lemons he was handed with the DEC acquisition - rather than just blowing the pieces off, make the best leveraged use of them to contribute to the overall ASP and e-business direction. I have not seen any analysis which showed me a better use of the AV asset than what Rosen actually did - in fact I have not seen any which was as good. I believe that the real benefit of the particular path Rosen chose has yet to be fully revealed, but I doubt that there was anything rash or ill-considered in the decision.

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