Former Compaq Chief Front-runner to Lead WorldCom
URL:http://www.washingtonpost.com/wp-dyn/articles/A38512-2002Nov11.html
By Christopher Stern
Washington Post Staff Writer
Monday, November 11, 2002; 1:19 PM
Michael D. Capellas this morning announced he is resigning as president of Hewlett-Packard Co., stepping down just as he becomes the front-runner in WorldCom Inc.'s search for a new chief executive.
Capellas is the former chairman of Compaq Computer and he helped lead the effort to merge his company with Hewlett-Packard. Sources cautioned that while Capellas is the leading candidate of WorldCom's executive search committee, he has yet to meet three members of the board of directors that must approve hiring him. WorldCom filed for bankruptcy in July after revealing a massive accounting scandal.
The troubled telecommunications company has been searching for a new leader since September, when the current chief executive John W. Sidgmore agreed to step down under pressure from the company's creditors. Five major creditors, which effectively own WorldCom as long as it is in bankruptcy, sit on the search committee that targeted Capellas for chief executive. Sources say some creditors favored finding an executive from outside the telecommunications industry to send a signal that the nation's second-largest long distance company is taking steps to make a clean break with its tainted past.
Brad Burns, a WorldCom spokesman, declined to comment this morning. Hewlett-Packard issued a statement saying that Capellas is leaving the company to pursue other opportunities. "We've reached a natural transition point. Michael made a commitment to see the merger through, and now thanks to the hard work of the entire team, we are meeting or exceeding all of our integration targets," said Carly Fiorina, HP chairman and chief executive, in the statement
"I am proud to have been associated with this company and believe -- as I have from the beginning -- that HP is redefining the information technology landscape," Capellas said as part of the same statement. The Wall Street Journal reported this morning that Capellas has emerged a strong leading candidate for the chief executive job at WorldCom.
WorldCom's potential gain is Hewlett-Packard's loss. Shares of Hewlett-Packard were down almost 9 percent this morning on the news of Capellas's departure. During his tenure at Compaq, Capellas won praise for restructuring a company that had been hit by a changing computer marketplace. WorldCom also has been hit hard by a changing market in the telecommunications industry that has seen increased competition and dramatic erosion in pricing.
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