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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Mike Van Winkle who wrote (118661)	4/19/1999 10:36:00 AM
From: Mohan Marette	Read Replies (2) \| Respond to of 176387

Did Pfeiffer have the right stuff? [Obviosuly NO] Mike: Oh so that is how you do it. "Pfeiffer has been making sure there is no number two at Compaq," said Kim Brown, analyst at Dataquest Inc. in San Jose, Calif., referring to the fact that there is no clear internal successor to Pfeiffer. "Compare that to what [Michael] Dell has done." ======================= Monday April 19 8:21 AM ET PC Week By Lisa DiCarlo, ZDNet Less than one week ago, Eckhard Pfeiffer spelled out Compaq Computer Corp.'s first solid plans for enabling e-business. But now, he will not be around to see the fruits of his labors realized. Although the former chief executive officer, who resigned Sunday, set and reached many lofty goals in its PC business, he failed to transition the company from PC maker to enterprise solutions provider. A case in point is Compaq's (NYSE:CPQ - news) lateness in articulating an e-business strategy which was just announced only last week -- this despite the fact that Compaq bought Tandem in 1997 and Digital Equipment Corp. in early 1998. Pfeiffer, who joined Compaq in 1983, was brilliant in executing PC sales strategies. It was that acumen that brought him from Compaq Europe (where he had major success) to become CEO of Compaq in 1991. At the time, Compaq's PC business was in a slump, the only time other than the Digital acquisition that it had to lay off employees. The turning point came in June of 1992, when Pfeiffer made the crucial decision to go after market share by slashing prices on existing systems, while also introducing the Prolinea low-cost PC. That move kicked off the first PC price war and began a consolidation in the industry that continues to this day. More importantly, however, it catapulted Compaq to the No. 1 PC spot, a distinction it also holds to this day. The right stuff? Given his PC roots, was Pfeiffer the right person to run the kind of company he envisioned? His track record of the past few years says no. The company hasn't yet seen the payoff from enterprise-centric acquisitions. For example, Compaq purchased two networking companies, Thomas-Conrad and Microcom, with the intent of offering high margin products and services to customers. But it folded that division last year. Some have said its Tandem acquisition has been lackluster, the only significant announcement since the purchase being the move from the Mips to Alpha architecture on Tandem's Himalaya servers. And then there's Digital. This was the move that Compaq said would take it into the glass house, to set it on the road to being a $50 billion company by 2000. Unless Compaq finds $19 billion in additional revenue by year's end, it will fall short of that goal. (Compaq's 1998 revenues were $31.2 billion) The company has not yet leveraged what was touted as the crown jewel of the acquisition, services. That's partly due to internal struggles over Digital's direct approach and Compaq's obligations to its channel partners to offer services indirectly. And while some had predicted that sales of Alpha systems would blossom under Compaq, that hasn't been the case. According to International Data Corp., unit sales of Alpha servers were down about 15 percent in 1998, compared with 1997. While it struggles to become an enterprise player, Compaq is having trouble in its core PC business. More than two years ago, Pfeiffer and CFO Earl Mason, who also resigned this weekend, explained how they would implement built-to-order manufacturing and direct sales to reduce cost and inventory and more effectively compete with Dell Computer Corp. (Nasdaq:DELL - news) The company has managed to keep its inventory down in the past few quarters, but has not seen revenue grow as it had hoped. No clear No. 2 So the question becomes who is the right person to lead Compaq to the next level? One analyst said the company will almost certainly have to look outside for a replacement. "Pfeiffer has been making sure there is no number two at Compaq," said Kim Brown, analyst at Dataquest Inc. in San Jose, Calif., referring to the fact that there is no clear internal successor to Pfeiffer. "Compare that to what [Michael] Dell has done." Compaq will now find itself competing for the same executive talent as Hewlett Packard Co., which is also on the lookout for a chief to run its enterprise business.