Resellers are holding out for Compaq to revert back to its indirectiple blow to fortunes topples chief executive. strategy following the surprise resignation of chief executive Eckhard Pfeiffer at the weekend.
It is understood that Compaq chairman Ben Rosen led the call for Pfeiffer's resignation. As acting chief executive, Rosen will run for interim chief executive, along with directors and vice chairmen Frank Doyle and Robert Enloe. Earl Mason, chief financial officer at Compaq, also tendered his resignation. Treasurer Ben Wells has been named acting chief financial officer.
In an official statement, Rosen said Compaq needed the 'organisational flexibility necessary to move at internet speed'.
Pfeiffer's departure comes one week after the vendor issued a profit warning, stating that earnings for the first quarter would be less than those predicted by Wall Street (PC Dealer, 14 April).
Pfeiffer also stirred up a row among hardware vendors, claiming there was a slowdown in the PC market. This all came at the same time as class action law suits piled up against Compaq over 11 directors' share dealings, placing Pfeiffer's position in doubt.
Dealers said they believed Pfeiffer had embodied Compaq's move into direct sales but are now looking for a more channel-friendly approach on Compaq's part.
One reseller said: 'It could be a positive thing for the UK channel.
Pfeiffer was very much for going direct. A replacement would probably reaffirm Compaq's relationship with the channel.'
But John Fison, managing director of Keltec Progress, claimed Pfeiffer was no less committed to the channel. 'I don't think the problem was on the business side. It was more about the surprises he landed on Wall Street,' he said.
Compaq will hold its annual shareholders' meeting in Houston this week, where the guest speaker was meant to have been Pfeiffer. He spent last week playing host to Compaq's leading corporate customers at the Innovate conference, detailing the manufacturer's plans for the future.
A similar fate befell co-founder and former chief executive Rod Canion, who was replaced by Pfeiffer in 1991.
Pfeiffer's resignation is the culmination of a catalogue of troubles at Compaq. Rosen hit the nail on the head when he alluded to the fact that the firm was running on empty.
'We have re-energised this company before and, working together, we will do it again,' he said. The last time Compaq was revamped was when Canion was ousted and replaced by Pfeiffer.
Under Pfeiffer's direction, Compaq increased its share of the global PC market from 3.5 per cent to nearly 15 per cent, usurping IBM's position.
But Compaq's reputation has taken a beating of late.
Rivals and analysts are refusing to accept a general downturn in the PC market as the reason for the vendor's problems. They claim it is more a question of its inability to sell on price. In addition, Compaq's e-commerce strategy has been described as incoherent.
Pfeiffer's demise also raises questions over how successful Compaq has been in integrating Digital into its channel strategy, as there is conflict between the direct services unit and Compaq resellers. Analysts say this is too complex a model to have adopted, especially to sell PCs, which are commodities.
Compaq may have the dominant share of the market, but its mindshare is looking shaky. Whoever becomes chief executive needs to act and to act fast.
Pfeiffer will leave the PC vendor with a guaranteed golden parachute of up to four times his base salary, according to sources.
In 1998, his salary was nearly $1.5 million and it is understood he will be allowed to exercise his 10.3 million stock options. But any hopes of Hewlett Packard snapping up Pfeiffer as the first chief executive of its soon-to-be spun off computer firm, will have to be put on hold, as he must sign a contract forbidding him from working for a rival for two years.
SEPTEMBER 1983: Pfeiffer is hired from Texas Instruments, becoming employee number 502 at Compaq and vice president of its European operations.
JANUARY 1991: Pfeiffer promoted from president of European and international division to chief operating officer.
OCTOBER 1991: With sales falling and profit disappearing, co-founder and chief executive Rod Canion is ousted by Compaq's board, replaced by Pfeiffer.
NOVEMBER 1991: Pfeiffer says he will dump the vendor's strategy of selling pricey, premium products and begin competing on price.
DECEMBER 1992: Compaq doubles its market share, begins selling PCs via phone and mail order.
APRIL 1993: Pfeiffer declares Compaq will become the number one PC maker by 1996.
1994: Compaq becomes number one PC seller.
JULY 1996: Pfeiffer wants Compaq to become one of top three computer companies by 2000.
JANUARY 1998: Compaq announces it will buy Digital Equipment. The deal, which closes in June, makes Compaq the number two computer company in the world.
9 APRIL: Compaq announces its first-quarter earnings will fall short of analysts' expectations.
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