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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: Night Writer who wrote (94090)	12/10/2001 3:41:35 PM
From: Elwood P. Dowd	Read Replies (1) \| Respond to of 97611

Capellas may see Support. Temporarily? by: skeptically 12/10/01 03:12 pm Msg: 263876 of 263893 Unlike HP's Fiorina,Compaq CEO Could Survive Failed Deal 12/10 1:30 PM (DJ) Story 3890 =DJ Compaq CEO -2: Capellas May Enjoy Support - For A While N/DJQA N/DJRT N/DJWI N/PER N/SNEW N/WEI [F/UI=dad [F/UN=makdadm Nevertheless, Compaq CEO Capellas' reputation may serve him well even if the merger falls apart, said Graham-Hackett of Standard & Poor's. "Wall Street's view of Michael Capellas is that he's a very good operations guy," she said. "Quite frankly, a lot of problems Compaq is going through are macro-economic in nature and are really not due to anything specific about his management." Such goodwill will last only so long, however, if Compaq's performance doesn't improve, analysts said. "If they go it alone, and they don't see operating margins improve, then they might have to consider alternatives and that's when a management reshuffle might come into play," said DealAnalytics.com's Keller. The company reported a net loss in the third quarter on a steep slide in sales and offered a fourth-quarter forecast below Wall Street expectations. Like many other technology firms, Compaq has been suffering from a steep drop-off in corporate spending on information technology, as well as lackluster demand for personal computers. Another alternative is for Compaq to find another suitor. "In this deal, Compaq showed its cards and said 'We don't really have a much better option than getting acquired,' " Graham-Hackett said. But the possibilities here may be limited. The only company that's profitable, gaining share and seen able to absorb a company of Compaq's size is Dell Computer Corp. (DELL), Graham-Hackett said. But, she added, Dell "has said time and again that they don't want to take on a business that would obscure or change their model." Keller, on the other hand, said he believes International Business Machines Corp. (IBM) is "remotely interested" in acquiring Compaq if the H-P deal falls through. He speculated that IBM might get more interested if Compaq's stock were to get cheaper, say below $8 a share. Compaq shares recently changed hands at $9.83, down $1.48, or 13%. H-P shares, meanwhile, were trading at $22.91, down 61 cents, or 3%. Those within the Compaq camp said Capellas continues to enjoy support from the company's board and shareholders. The Wall Street Journal reported Monday that Thomas Perkins, a Compaq board member, said the board is "strong and united with management." Perkins also said the company was prepared to go it alone if the deal weren't to proceed. Although Compaq spokesman Arch Currid declined to comment on Capellas' likely fate if the Hewlett-Packard deal falls through, he said he's convinced that Capellas retains broad support. "I can tell you that Michael has uncanny support from customers and shareholders, and the confidence of the board," Currid said. "Michael is still strong, and I certainly see him as a survivor." In addition, Currid pointed out that Capellas received what amounted to a big vote of confidence for his management and leadership style little more than a year ago, when Ben Rosen, the company's co-founder and chairman, retired. At the time, Capellas was named chairman in addition to his dual positions as president and chief executive. Those titles hadn't been unified for most of the company's history. Rosen "felt that he had finally found an heir apparent," Currid said. "And I think most people think of Michael that way." -By Ross Snel, Dow Jones Newswires; 201 -938 -5285; ross.snel@dowjones.com -Bob Sechler in Austin, Texas, contributed to this report. (END) DOW JONES NEWS 12 -10 -01 03:00 PM