CPQ going UP tomorrow ?
Tuesday January 4, 4:00 pm Eastern Time
Company Press Release
SOURCE: Compaq Computer Corporation
Compaq Enhances Direct
Capabilities
Purchases End-to-End Order Management and Complex Configuration
Capabilities From Inacom
HOUSTON, Jan. 4 /PRNewswire/ -- Compaq Computer Corporation (NYSE: CPQ - news)
today announced a major step to enhance its direct capabilities in the United States, enabling the
company to accelerate its progress toward reducing inventories and speeding cycle time. The
company has agreed to purchase certain assets of Inacom Corporation (NYSE: ICO - news) that
are key to Compaq's direct strategy, providing best-in-class complex configuration capabilities
along with end-to-end order management and direct fulfillment capacity for approximately $370
million in cash.
''With this significant step, we are advancing Compaq's ability to deliver the leading portfolio of
Internet access and infrastructure products, services, and solutions directly to customers with a
single point of accountability,'' said Michael Capellas, President and Chief Executive Officer
(CEO). ''This purchase makes great strategic sense for Compaq because it gives us the right
capabilities quickly and cost-effectively. We'll be better equipped to meet the diverse and changing
needs of our U.S. customers -- particularly our major accounts which clearly want to go direct --
increasing our potential for profitable growth.''
Under the terms of the agreement, Compaq will purchase certain operational assets from Inacom
for approximately $370 million in cash. Compaq will use the acquired assets to operate a
separately managed, wholly owned subsidiary, reporting to Mike Winkler, Senior Vice President
and Group General Manager, Commercial Personal Computing Group. The agreement is binding
on both parties and does not require shareholder approval. The transaction is expected to close
later this quarter, subject to normal regulatory approvals.
''As customers turn to the Internet to conduct business with Compaq, it is more important than
ever that we have the sophisticated, scalable infrastructure to ensure a completely dependable
direct delivery system,'' said Winkler. ''Purchasing these best in class operations immediately
enhances our ability to increase customer satisfaction by providing direct accountability for even the
most complex order, along with tailored configurations including hardware and software image
certification, asset tagging, and the vast array of third party peripheral products that complete the
solution. Customers will know exactly where their order is at any given moment, and will benefit
from rapid, efficient delivery.''
Specifically, this acquisition gives Compaq industry-leading custom configuration and end-to-end
order management capabilities that customers are insisting on, including:
Custom Configuration. Enhanced custom configuration capability and capacity including hardware,
software image certification, image load, and asset tagging for the entire range of PC and PC server
products along with a substantially greater array of third party options than direct competitors can
offer today.
End-to-end Order Management. Additional depth in an efficient end-to-end order management
system for complex orders, providing our customers with complete visibility to track their orders
from placement to delivery direct from Compaq. The Inacom system allows customers to track
their orders via the Internet including order status for all phases of the product delivery:
drop shipment with multiple shipment addressing
partial delivery and order splitting
direct access to accounts receivable and credit status information
integrated shipment tracking
Compaq also has entered into a services, supply, and sales agreement with Inacom. Under this
agreement, Compaq will use Inacom's service capabilities in combination with its own to offer
customers the full spectrum of lifecycle services for desktop, mobile, and server environments as
well as infrastructure procurement, support, management, optimization, and disposal.
''This agreement is a positive outgrowth of the long-standing relationship between Inacom and
Compaq,'' said G. A. Gagliardi, Inacom President and CEO. ''Our customers benefit from the
complex customization capabilities and full range of services and support available through our
companies.''
''By bringing these operations in-house, we improve our direct capabilities and complement
Compaq's existing programs -- including Partner Direct and Agent programs through which we
ship directly to our customers on behalf of Value-added Resellers (VARs),'' said Winkler. ''This
transaction provides Compaq the ability to better execute its direct strategy. Since Compaq
accounts for approximately 40 percent of Inacom's product business today, this transaction is really
just an extension of what we're already doing together and the transition should be seamless for our
customers,'' Winkler stated.
''Compaq is advancing on a clear strategic path,'' said Capellas. ''We said we would re-engineer
the channel delivery model and this transaction, together with other initiatives already underway,
takes us a long way toward meeting that goal. As we create the Internet infrastructure and redefine
Internet access, we will be taking a series of steps, both large and small, to execute our strategy
and deliver profitable growth for our shareholders.''
About Compaq
Compaq Computer Corporation, a Fortune Global 100 company, is the second largest computer
company in the world and the largest global supplier of computer systems. Compaq develops and
markets hardware, software, solutions, and services, including industry-leading enterprise
computing solutions, fault-tolerant business-critical solutions, enterprise and network storage
solutions, commercial desktop and portable products, and consumer PCs. The company is an
industry leader in environmentally friendly programs and business practices.
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 are available at compaq.com, or by calling 1-800-OK-COMPAQ. Product
information and reseller locations are available by calling 1-800-345-1518.
Compaq, Registered U.S. Patent and Trademark Office. Product names mentioned herein may be
trademarks and/or registered trademarks of their respective companies. This release contains
forward-looking statements based on current expectations that involve a number of risks and
uncertainties. The potential risks and uncertainties that could cause actual results to differ materially
include the failure to close the contemplated transaction; continued competitive factors and pricing
pressures; and market responses to the transaction. Further information on the factors that could
affect Compaq's financial results are included in its SEC filings, including the annual report on Form
10-K for the year ended December 31, 1998, and the quarterly report on Form 10-Q for the
quarter ended September 30, 1999.
SOURCE: Compaq Computer Corporation |
