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: Captain Jack who wrote (58465)	4/18/1999 8:19:00 PM
From: Andreas	Read Replies (2) \| Respond to of 97611

Here's the Street.com article: Compaq's Top 2 Leaders Resign By Eric Moskowitz Senior Writer 4/18/99 6:54 PM ET How bad is it, really? That's what Compaq (CPQ:NYSE) investors must be asking themselves after hearing the news today that the company's top two leaders have jumped ship. "I'm totally shocked, not so much about [CFO Earl] Mason leaving, but that [CEO Eckhard] Pfeiffer is resigning," says John Mannino, a Compaq shareholder who lives in Philadelphia. "From a shareholder's standpoint, there has to be a lot more left unsaid from what was announced last week." After the company preannounced nine days ago that its first-quarter earnings would be less than half of analysts' expectations, institutional investors were calling for Mason's head. But no one thought this one unexpectedly weak quarter would send Pfeiffer packing as well. Pfeiffer, who has been with the company since 1983 and who as CEO throughout the 1990s led it to a leading position in the PC space, submitted his resignation, according to a statement hastily released by the Houston-based company this afternoon. Chairman Ben Rosen, along with Vice Chairmen Frank Doyle and Robert Ted Enloe III, will oversee the day-to-day duties of the chief executive's office, Compaq said in its statement. "Under Ben's guidance, I know this company will realize its potential, transforming the industry yet again," Pfeiffer said. Rosen, who founded Compaq, hired Pfeiffer to lead the company in 1991. At least Mason seemed to be ready for the news. The former Inland Steel CFO also resigned, taking a job as CEO "of a company in an unrelated industry," Compaq's statement said. So far, Wall Street has decided the bad news coming out of Compaq this month is mostly company-specific. While Compaq's stock fell 30% over the last week, Dell's (DELL:Nasdaq) was only off a fraction, and Gateway (GTW:NYSE) was off 8%. Still, concerns were mounting that severe pricing pressures and the continuing commoditization of the PC industry will spell trouble for all companies, including Dell. The top PC companies -- in terms of market share, they are Compaq, Dell, Gateway, IBM (IBM:NYSE) and Hewlett-Packard (HWP:NYSE) -- all have been rapidly expanding into other areas (storage, servers, workstations) to compensate for any shortfall in PC profits. But the news that Pfeiffer -- who has led this PC revolution almost more than any other executive -- is resigning could be a blow for all those who feel the PC will remain the main driver of this more than decade-long technology stock run. "This really begs the question of what's going to happen to the PC industry,'' says Dan Niles, an analyst with BancBoston Robertson Stephens. "There were rumors that Mason was under a lot of pressure, but the fact that Pfeiffer wouldn't stick around means there is something more behind it." Niles, who downgraded Compaq to a buy from a strong buy last Monday, suggests that the company could once again be seeing channel inventory levels increasing. In December 1997, Niles foresaw a buildup in Compaq's inventory. Of course, H-P and Dell went out of their way this month to say their PC business was still doing well in 1999. IBM is set to report earnings on Wednesday in what is sure to be a very interesting conference call. (Compaq, by the way, also reports first-quarter earnings before the open Wednesday.) For some professional money managers, Compaq's management has always been a question mark. "My expectations have been coming down ever since Mason came on board in 1996," says an institutional money manager who asked not to be identified and who says he has no position in the PC group. The manager, who spoke with TSC last week, points to how the company is involved in six lawsuits, alleging that top executives sold off stock because they knew bad news was coming. Compaq's Mason, for example, sold 265,000 shares, worth over $12 million, on Feb. 1, according to data tracker Baseline. Mason, who joined Compaq from Inland Steel in May 1996, wasn't immediately available for comment. Compaq Treasurer Ben Wells will become the new acting CFO. Pfeiffer, despite this quarter's speed bump, seemed well on his way to making good on his audacious goal of $50 billion in sales by 2001, generating $31 billion in sales in 1998, up from just $3 billion in 1991. But if recent history is any evidence, Rosen may have grown tired of Pfeiffer's boasts. In early 1991, Rosen came out with a report that proved Compaq was spending too much on producing PCs. He wanted to institute changes in the manufacturing process, but then-CEO Rod Canion resisted and Rosen replaced him with Pfeiffer. Who will replace Pfeiffer? That's the multibillion-dollar question shareholders will be asking Monday.

To: Captain Jack who wrote (58465)	4/18/1999 10:01:00 PM
From: sshia	Respond to of 97611

Wall St. Journal says he was forced out April 18, 1999 Compaq CEO Eckhard Pfeiffer Steps Down at Board's Request By CHRISTOPHER GRIMES Dow Jones Newswires NEW YORK -- Compaq Computer Corp. -- 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 Mr. Pfeiffer Saturday to suggest that the company needed new leadership. Mr. Pfeiffer, 57 years old, officially resigned Sunday. Mr. Rosen, who is acting as chief executive, said the board of directors had thought about replacing Mr. Pfeiffer for some time. "Boards don't do these things precipitously," Mr. Rosen said in an interview 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. Mr. Rosen said the first-quarter problem was "a factor" in dismissing Mr. Pfeiffer, but not the only one. "Unfortunately, we had a disappointing first quarter last year and three years ago," Mr. 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," Mr. Rosen said. "We don't have all the details of the quarter, but certainly I'm disappointed by the reaction to it," he said. Some on Wall Street said Compaq's troubles stemmed from the $9 billion Digital acquisition, which was completed last summer. But Mr. 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. Mr. Pfeiffer, who is German, joined Compaq in 1983 to head the fledgling personal-computer 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., 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. Mr. Mason, 51, attracted criticism from Wall Street, too. Some said privately that he was too optimistic in his guidance to them. And many were upset 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 Mr. Rosen said the timing of Mr. Mason's departure was a coincidence, adding that Compaq did not ask for Mr. Mason's resignation. Mr. 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 seek out Mr. Mason's replacement and Heidrich & Struggles to replace Mr. Pfeiffer. Mr. 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 Mr. Rosen, Mr. Enloe and director Frank P. Doyle, who came to Compaq from Digital. Compaq shares, which traded as high as $51.25 this year, dropped 23% on April 12, the first day of trading after the announcement. Compaq closed Friday at $23.625. Compaq said that heightened competition and disappointing sales of its most profitable computers will result in net income of about $250 million, or 15 cents a share, for the quarter, Compaq said. That was well below the already-lowered consensus estimate of $560 million, or 32 cents a share, held by Wall Street analysts. Revenue was projected at $9.4 billion, $100 million to $400 million below analysts' projections