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To: Valueman who wrote (27390)	4/18/1999 9:24:00 PM
From: Sawtooth	Respond to of 152472

<<Compaq Says Eckhard Pfeiffer Resigns as CEO, Earl Mason Resigns as CFO>> Compaq, Under Fire From Wall St., Dismisses Pfeiffer By CHRISTOPHER GRIMES Dow Jones Newswires 4/18/99 NEW YORK -- Compaq Computer Corp. (CPQ) - simulataneously shouldering Wall Street's anger, the pressures of a rapidly changing computer market and the massive buyout of Digital Equipment Corp. - dismissed Eckhard Pfeiffer from the chief executive's office. Two board members, Benjamin M. Rosen and Robert Ted Enloe III, met Pfeiffer Saturday to suggest that the company needed new leadership. Pfeiffer, 57, officially resigned Sunday. Rosen, who is acting as chief executive, said the board of directors had thought about replacing Pfeiffer for some time. "Boards don't do these things precipitously," Rosen said in an interview with Dow Jones Sunday evening. "Under Eckhard's regime, since late 1991, we had terrific growth for five years. (But) in the last couple of years, the performance hasn't been as good as it should be." Compaq angered many Wall Street analysts April 9 with a surprising late-Friday afternoon warning that first-quarter earnings wouldn't live up to expectations. The following Monday, Compaq shares fell 22%, and the company acknowledged that it had to work to rebuild credibility with investors. Rosen said the first-quarter problem was "a factor" in dismissing Pfeiffer, but not the only one. "Unfortunately, we had a disappointing first quarter last year and three years ago," Rosen said. "It was not an isolated event." He said he couldn't say right now how the first-quarter problems could have been handled better. "That's something we're going to look into," Rosen said. "We don't have all the details of the quarter, but certainly I'm disappointed by the reaction to it." Some on Wall Street said Compaq's troubles stemmed from the $9 billion Digital acquisition, which was completed last summer. But Rosen said the board "on balance (is) very pleased with the acquisition and the progress so far." But he said it's understandable for investors to be concerned about the DEC integration. "As we get into this . . . we want to change the view of the Digital acquisition." He said Digital brought to Compaq a successful services organization, plus Alta Vista, the Internet search engine expected to go public later this year. Pfeiffer, who is German, joined Compaq in 1983 to head the fledgling PC company's European operations. He became chief executive in 1991, succeeding co-founder Rod Canion, who had drawn criticism himself. Compaq, the world's top PC maker, has had problems matching the efficiencies of fast-growing rival Dell Computer Corp. (DELL), which sells computers directly to customers. Compaq has realigned its inventory, manufacturing and distribution processes several times over the last few years, often achieving mixed results. Further, PC prices continue to fall rapidly, putting a squeeze on profits. Compaq also said Sunday that Earl Mason had resigned as chief financial officer. Mason, 51, attracted criticism from Wall Street, too. Some said privately that he was too optimistic in his guidance to them. And many were preturbed in February when a group of visiting investors were told that the Compaq was seeing weakness in some markets. To some analysts, this seemed like selective disclosure. But Rosen said the timing of Mason's departure was a coincidence, adding that Compaq did not ask for Mason's resignation. Mason was thought to have left to head a food service concern in the Midwest, and a press release is expected from that company early this week. Compaq hired executive search firm Covoy Sur to handle the search for Mason's replacement and Heidrich & Struggles to replace Pfeiffer. Rosen, who lives in New York, will stay in Houston during the week while he acts as CEO. The company formed the office of the chief executive, consisting of Rosen, Enloe and director Frank P. Doyle, who came to Compaq from Digital. - Christopher Grimes; (201) 938-5253