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

To: Captain Jack who wrote (61376)	5/15/1999 5:01:00 AM
From: rupert1	Respond to of 97611

they need another committee to PREselect a few and allow the office of CEO to review their findings and make the decision That sounds too bureaucratic for Rosen. He started considering a change of CEO in mid-February. Potential successors would have been part of his calculations. The preferred route would be for Rosen and his team to hand the search firms (Struggles) a preliminary short-list. The search firm does most of the work. The office of the CEO is the committee you proposed, which submits recommendations to the Board. Even if a candidate were selected quickly it would take months for him (and it won't be a she no matter how politically correct they try to be) to sign a contract and extricate himself from current obligations. Rosen and co had the choice of keeping EP in place, as they did when Cannion was replaced, while a successor was found and introduced. The fact that they decided to do it abruptly means that they wanted to get their hands on the company to make changes which they considered to be urgent. Those changes would not have been made if EP had remained in place while a successor was selected. This decision supports the view that they are not putting anything on a back-burner. Strategic changes are being made now, the new CEO can make additional changes in due time. The 10-K filing appears to include reference to the effect departing executives may have on current operations, also. Unless they know something about the departures, that we don't know, the departures have been part of a streamlining exercise (with the possible exception of Rando - and he is staying on for any transition). The positions being vacated are now redundant. Nevertheless, those lawyers out there, monitoring every move the company makes, will try to argue that the decision to sack the CEO and the CFO and to allow/encourage others to go, is an admission by COMPAQ of executive and managerial incompetence and/or one of the causes of any perceived shortfall in the company's performance. At the very least they will argue that the company should have filed a warning with the SEC that these changes were a potential risk factor. The SEC, itself, requires such filings. Of their very nature, the 10-K filing raises the theoretical possiblity that 2Q and 1999 performance will be less than the company had previously guided analysts to expect in 1Q. At some point Rosen will have to amend guidance. I suppose he could leave it to the CC after earnings are announced on the grounds that he needs the time to review the reliability of internal forecasts. But he would lose goodwill with the investment community if he waited that long. The damage would be much greater if he remained silent for a long time and then failed to meet current expectations. Subject to further information, my reading is that current expectations will be exceeded. Whatever my estimate is, the SI CPQ Thread Constitutional Conventions require it to be higher than Elwood P. Dowd's estimate. Finally, the 10-K filings confirm that most of the original 15,000 target redundancies following the acquistion of DEC have been effected.