Compaq could announce new CEO on July 28
The computer maker is aiming to announce a new chief executive when it reports second quarter earnings on July 28, sources close to the company say.
But the plan is contingent on concluding negotiations with the company's leading candidate Peter Hellman, former president and chief operating officer of TRW, said sources close to Compaq.
For the first time since Gregory Brenneman, president of Continental Airlines, removed himself as a contender last month, Compaq appears close to a decision. Sources close to Compaq said the board wanted Brenneman.
Although efforts to right itself remain far from over, Compaq appears to be making progress. On June 29, Compaq sold a controlling interest in AltaVista to CMGI for $2.3 billion.
The stock has risen from a 52-week low of 20 in June to above 27. Compaq is expected to report a loss of 11 cents a share for the second quarter, according to a poll of analysts on First Call, a slight upgrade from the consensus estimate of a 12-cent loss earlier this month.
Mike Winkler, one of the heads of the three new Compaq divisions, said on Tuesday that Compaq is "getting close" to a CEO decision, according to International Data Corporation analyst Roger Kay. Other sources close to Compaq have said that the goal has become to announce the new CEO when the second-quarter earnings come out July 28. Compaq announces earnings before the stock market opens.
Since the April 18 ouster of chief executive Eckhard Pfeiffer, board members Ben Rosen, Frank Doyle, and Ted Enole, acting collectively as the Office of the Chief Executive, have controlled Compaq's direction. Rosen will reportedly stay on as chairman.
Meeting expectations
Jeff Christian, CEO of Christian & Timbers, the company hired to find HP's next chief executive, said Compaq faces a number of obstacles in its search, including resistance to possible board oversight and the fact that the firm is based in Houston.
"The location makes Compaq more difficult, and the financial performance makes it more difficult," Christian said. "It all depends upon the board and their expectations and is the [CEO] search firm and Compaq in sync on their expectations."
Compaq will be a tough turnaround, Christian said, and will require a chief executive looking to make a name for himself. Also, "Compaq has a lot more rebuilding to do in its management team. They've lost a number of key people."
In a June 17 reorganization, Rosen and company sought to shore up Compaq's weakened management team by placing heads over three newly formed divisions: Winkler over the Personal Computer Group, Mike Larson over the Consumer Group, and Enrico Pesatori over the Enterprise and Services Group.
The three senior vice presidents and group managers have been conducting reorganization meetings that increasingly make Compaq more like three companies in one larger organization. Senior Enterprise and Services Group managers, for example, met with Pesatori this week as part of an ongoing strategy session.
Hellman, who made a name for himself at TRW by dissecting underperforming divisions and refocusing the company, would have to embrace Compaq's new three-in-one structure.
Other names circulating
Another possible candidate is Larry Weinbach, chief executive of Unisys. Unisys has become something of a favorite with some analysts by showing a rebound in growth.
The company announced its second-quarter earnings today with a 58 percent increase in diluted earnings, or 38 cents a share. Periodic rumors have circulated over the years that Compaq might buy Unisys, which has worked with Compaq on various projects, for its service expertise. One of the last times a rash of Compaq-Unisys rumors circulated, however, Compaq bought Digital.
Atiq Raza, who resigned as president of AMD yesterday, has also emerged as a remote possible candidate for the job.
Compaq was not available for comment on the Unisys rumor or status of its CEO search. A Compaq spokesperson said yesterday the company does not comment on rumor or speculation.