Compaq names Capellas president, CEO

Financially troubled Compaq Computer said on Thursday it will promote Michael Capellas to president and chief executive officer (CEO), an executive who had served as chief operating officer for seven weeks and as chief information officer before that.

Before joining Compaq in August 1998 as CIO, the 44-year-old Capellas held executive positions at Oracle, SAP America and Schlumberger, and was a founder of Benchmarking Partners, an IT and supply chain management consulting firm in Cambridge, Massachusetts.

Compaq has been without a CEO since mid-April when it ousted Eckhard Pfeiffer and Earl Mason, senior vice president and chief financial officer, about a week after announcing that earnings for the first fiscal quarter would be half of what was expected. On April 21, the company reported first-quarter earnings of $US281 million, or 16 cents per share, on revenue of $9.4 billion, citing poor sales of its PC and high-end systems.

Things don't look much improved for the second quarter. Compaq announced on June 17 that it expects to post a loss of 15 cents per share for the quarter ending July 28, and announced a reorganisation that would split the company into three global business groups -- Enterprise Solutions and Services, Personal Computer, and Consumer. As a result of the reorganisation, Compaq will take a "substantial" restructuring charge in its third quarter, the company said in a statement.

Thirty analysts polled by First Call predict the company will report on July 28 a loss of 11 cents per share for the second quarter.

"In the end, our choice was easy. In a field of excellent candidates, Michael was clearly superior," said Compaq chairman Benjamin Rosen, in a statement. "He has a better understanding of where information technology is going than anyone else we talked with -- inside or outside the company. He has a clear vision for Compaq and the industry. He has strong leadership skills, an excellent rapport with customers and, with years of experience in information management, a true understanding of customer needs. And he has a passion for winning."

Capellas was credited in a company statement with playing a key role in developing the company's e-commerce strategy; consolidating its IT organisation, including a cost reduction; implementing a supply chain strategy, including consolidating manufacturing; developing a market strategy for the integration of Digital Equipment Corp; and recruiting several new managers.

One analyst questioned said Capellas seems to have the "meat and potatoes" ability to run a company, but questioned whether he has the "star quality" necessary to make the company stand out in the eyes of the public.

"Has he got the necessary presence to be a leader in an industry where presence counts?" wondered Roger Kay, a desktop market analyst with International Data Corp in Framingham, Massachusetts. "He's got the meat and potatoes basic-industry, daily-decision-making power you need to do the job, but the other piece of it is the public persona."

"It's increasingly important to have a real character at the top," he added. "If it's not a founder, like Steve Jobs or Bill Gates, then you need an industry leader with a polished resume and a sort of star quality."

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