Speculation is mounting that Digital will sell its hardware operations, after senior executives cashed in on $2.5 million of share options last month and the company produced a better-than-expected Q2 profit.
Sources insist Compaq is considering a takeover bid for Digital and that chairman Bob Palmer may appease shareholders by offloading Digital?s hardware arm.
One analyst said: ?Palmer is coming to the end of his service and he could offer shareholders real value. He could sell the server and PC units ? which contribute $6 billion to the $14 billion turnover ? for about $2 billion, and keep the profitable bits. He would get a rebadging agreement with Compaq, cash in the bank and happy investors.?
It is not clear whether Digital would retain its Alpha chip-making business. It would certainly hang on to high growth areas such as network products and Internet software.
A UK source close to Digital said the acquisition would make sense. ?Compaq has nowhere to go. Digital would offer critical mass and their own technology.?
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