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

To: Paul Berliner who wrote (58448)	4/18/1999 7:41:00 PM
From: witurac	Respond to of 97611

Sunday April 18 7:33 PM ET Compaq President, CFO Both Resign By MARK BABINECK Associated Press Writer HOUSTON (AP) - Compaq Computer Corp. (NYSE:CPQ - news) president and chief executive officer Eckhard Pfeiffer resigned today, one day after the slumping PC giant's board of directors told him they wanted new leadership. ''The board over a period of time came to the conclusion, not for a single event, that we should have a change,'' Benjamin M. Rosen, chairman of the world's largest personal computer maker, said Sunday in an interview. Pfeiffer's resignation came just over a week after Compaq stunned Wall Street by announcing that first-quarter profits would be just half of analysts' estimates. The company said on April 9 that it expected to earn 15 cents per share in the quarter on revenue of $9.4 billion - $600 million lower than expected - in large part due to industrywide price-cutting. Final first-quarter results are expected to be announced later this week. Compaq has struggled to maintain profits in an environment in which prices are dropping fast and sales of personal computers for under $500 - or even less - are growing. ''What this says is that things (at Compaq) are more screwed-up than even the results would have you believe,'' said Aaron Goldberg, vice president and principal analyst at Ziff-Davis Inc. (NYSE:ZD - news) in New York. Earl Mason, Compaq's chief financial officer, also resigned Sunday in what Rosen said was an unrelated move. ''In Earl Mason's case, he was offered every CFO's dream: to be chief executive officer of a company,'' Rosen said. Rosen didn't identify the company, other than to say that it was in a totally different industry. Compaq treasurer Ben Wells will take on Mason's duties on at least an interim basis. Goldberg said he expects additional management changes. Shares of Compaq, which traded as high as $51.25 earlier this year, dropped 22 percent on April 12, the first day of trading after the announcement. Compaq closed Friday at $23.621/2 on the New York Stock Exchange, barely above its 52-week low of $22.933/4. ''We think the increasing complexity in changes in our business have required a change in leadership,'' said Rosen, who was named acting chief executive while the company searches for a permanent successor. ''We have re-energized this company before and, working together, we will do it again.'' Rosen also said Compaq is well-positioned as a major player on the Internet, but Goldberg said the company has done little to take advantage of the Net so far. ''It's like the NFL draft: You have 31 guys based on potential, but haven't done anything yet. Compaq has tremendous potential but hasn't done anything yet.'' In a statement, Pfeiffer stuck to the positive. ''Compaq has come a long way since I joined the company in 1983,'' he said. ''We are a world leader in personal computing, enterprise computing and Internet applications.'' Pfeiffer, who took over as CEO in October 1991, created the strategy that helped make Compaq the leader in global PC sales. His belief in a computer run by a Microsoft Windows operating system and powered by an Intel microchip help solidify the ''Wintel'' platform as the dominant one in the industry. In 1998, Compaq shipped 12.8 million computers worldwide to gain 14 percent of the market, according to the research firm Dataquest Inc. But, analysts say Compaq has struggled to assimilate fellow computer maker Digital Equipment, which it acquired last year for $9 billion. Sales of Digital's minicomputers - medium-sized corporate computing systems that are smaller than mainframes - have disappointed analysts. In addition, Compaq has never fully integrated Tandem Computers, which it bought in 1997. Tandem makes technology that helps clusters of computers run together and continuously, overcoming such problems as power failures. Compaq sells computers through a traditional distribution structure that includes resellers who act as a middleman and take a share of the profits. This has placed it at a disadvantage against companies such as Dell Computer Co. and Gateway, which sell directly to customers by phone or over the Internet and allow customers to create any kind of system they want. Compaq has faced difficulty emulating this model. Analysts said it has alienated Compaq's resellers - including retail stores - who are apt to see Compaq as a potential sales rival and instead may focus on selling other companies' brands. Rosen indicated Compaq will continue to allow customers a choice in how they buy computers. ''Our feeling now is that we shouldn't dictate how a customer buys a computer, whether it's directly, through a value-added reseller or through the Internet,'' said Rosen, Compaq's chairman since its inception in 1982. Compaq has said it plans to boost the computer services it offers business customers as a way to boost declining profits from sales. Earlier Stories Compaq Chairman, CFO Both Resign (April 18) Search News Stories Search News Photos Apr 17 \| Apr 16 \| Apr 15 \| Apr 14 \| Apr 13 \| Apr 12 \| Apr 11 \| Apr 10 \| Apr 09 \| Apr 08