Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: QuentR who wrote (57614)	4/13/1999 3:26:00 PM
From: rupert1	Read Replies (2) \| Respond to of 97611

April 13, 1999 -------------------------------------------------------------------------------- Compaq CEO Says Co. Shifting Focus to 'E-Business' Dow Jones Newswires By B HOUSTON -- Compaq Computer Corp. (CPQ) Chief Executive Eckhard Pfeiffer told a gathering of Compaq customers here that his company's goal for 2000 is to become the Internet computing leader. His comments, during a keynote address Tuesday at Compaq's Innovate Forum 99 conference, came just a day after Compaq stock plummeted 22% on the heels of a surprise warning by the company that first quarter earnings were less than half what analysts had expected. Pfeiffer acknowledged the reaction to the unexpected earnings warning at the start of his speech, saying the company's strategic goals remain on track. "This will not slow us down," he said. "We will move forward aggressively. We fully intend to expand our business and grow market share profitably in 1999." He devoted no other comments to Compaq's earnings during his speech, focusing instead on a strategy by the company to become the leader in information technology and Internet business solutions. He announced what Compaq is calling its "Nonstop eBusiness" initiative to Web-enable its enterprise business customers. "The Internet is transforming everything," Pfeiffer said. "It is absolutely clear that the Internet is transforming everything." In his speech, CEO Pfeiffer said Compaq's Internet plan involves the company and its partners providing customers with all the hardware, software and services they'll need to meet specific e-commerce needs. "During the past three years, we have transformed Compaq from a PC company to a global IT leader," he said. Pfeiffer didn't say when he expects the Internet focus to pay off in new revenue. He said the company's $9 billion purchase of Digital Equipment Corp. last year was among the things that have helped position Compaq for the strategy shift. Some analysts have blamed complications from integrating Digital on Compaq's problems. Pfeiffer didn't address the issue directly but said the integration generally is on track. He said the major portion of the integration was supposed to be achieved by the end of last year, "and we achieved it for the most part. "I'd say with a few exceptions we are on target," he said after his keynote address. The integration "continues on an ongoing basis" and should be complete in the first half of this year. The company warned late Friday that earnings for the quarter ended March 31 will come in at about 15 cents a share, less than half the consensus figure of 32 cents a share. Pfeiffer has blamed heightened competition and lower-than-anticipated demand for its most profitable personal computers. The conference, which Compaq holds every two years, is a customer gathering designed to showcase its products and services. More than 4,000 executives from Compaq's biggest customers are attending. The focus of this year's event is the Internet and strategies companies can use to adapt to it. CEO Pfeiffer also defended what he called Compaq's "customer choice" sales model over the vaunted direct model pioneered by chief rival Dell Computer Corp. (DELL). Compaq sells its products through retailers but has been developing a direct sales operation as well, similar to Dell's, by making products directly available to consumers through the Internet and telephone. Some analysts contend Compaq's attempts to juggle both retail and direct sales have contributed to its earnings woes because it has caused confusion, has angered computer resellers and has increased costs. For example, two weeks ago, the company disclosed that the five-month-old Prosignia PC line, designed for direct sales, is available in retail stores. But Pfeiffer defended its sales strategy Tuesday as promoting "customer choice," saying it enables customers to decide how they want to purchase Compaq products. "The customer choice model is clearly superior" to a strictly direct model, he said. "The fact that we're offering a consumer product through a retail channel is a convenience to the customer. Compaq is capable today to address 100% of existing and potential customers" through its various sales mechanisms. -Bob Sechler; 512-236-9637