Compaq's new focus is services, Pfeiffer says

Compaq CEO Eckhard Pfeiffer says his company's acquisition of Digital Equipment is complete and that Compaq is now starting on the next phase of its life, one in which a growing percentage of its revenues will come from Internet-related services.

Compaq CEO Eckhard Pfeiffer says his company's acquisition of Digital Equipment is complete and that Compaq is now on track towards becoming a "$US50 billion company in the year 2000." Compaq in its last fiscal quarter reported net income of $758 million on revenues of $10.9 billion.

"A major portion of our revenues comes from services and that will grow as a percent of the overall share of Compaq," he said. Many other major computer vendors are now trying to boost their revenues from services such as World Wide Web hosting, data center management and consulting.

Compaq, which has built its fortunes on selling PCs and servers, is in the throes of expanding its offerings to better compete with more fully integrated computer vendors such as IBM . Compaq's recent acquisitions of Tandem Computers Inc. and Digital were made in the hope of strengthening its high-end server, services and systems integration businesses.

With the acquisitions, Compaq now has 27,000 field engineers worldwide, a force that can be used to offer customers services on top of Compaq hardware, Pfeiffer said. In February, Compaq said it will gradually roll out a range of new services for building networks for small to medium-sized businesses as well as large enterprises.

"We have transformed the company from a PC company to a global IT leader," he said confidently.

Pfeiffer said that last year 18 percent of Compaq's revenues came from services while "PC products" -- PC hardware, software and services -- contributed a full 34 percent. By contrast, IBM, a recognized leader in computer services, garners over 30 percent of its revenues from services.

One key part of Compaq's plan to grow that side of its business is to focus on Internet-related services and businesses, Pfeiffer said.

Specifically, the company will strengthen its service offerings to enterprises that want to set up electronic commerce Web sites. In addition, Compaq will focus on supply chain management, or systems that enable a company to analyze information drawn from all its businesses, from the supply of materials to the sale of finished goods.

Compaq will also focus its energies on its two Web sites, Compaq.com, for selling products and services, and Altavista.com, which it recently spun off into a wholly-owned subsidiary and will eventually take public, Pfeiffer said.

AltaVista is now undergoing a reconstruction phase as Compaq integrates its two other Web properties, Shopping.com Inc. and Zip2 Corp. into the site, he said. Compaq is discussing "content partnerships" that the vendor will "announce when the total AltaVista site is integrated with these other capabilities," Pfeiffer said. He did not disclose when that announcement will be made.

Compaq, in Houston, Texas, can be reached at +1-281-370-0670 or on the World Wide Web at http://www.compaq.com/.

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