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Insider promoted to CEO at Compaq

Compaq Computer has chosen Michael Capellas, its former chief information officer who was recently promoted to the post of COO, to become the company's new chief executive.

Compaq Computer has chosen Michael Capellas, who was recently promoted to the post of chief operating officer, to become its new president and chief executive.

The selection of the insider Capellas, 44, ends a difficult three-month search for a new leader that began after the board asked former CEO Eckhard Pfeiffer to resign in April. A conference call will be held at 2 p.m. PT to further explain the details.

"We have assembled the greatest team in the industry, and together we will secure Compaq's destiny as the information technology leader," Capellas said in a statement. "Execution is our challenge, and we are ready to meet it head on."

Speculation had largely focused on outsiders for the job. Most recently, sources said that a leading candidate for the position was Peter Hellman, former TRW president.

Capellas's rise to the top of the heap at Compaq has been swift. He joined the company in August, 1998, after serving as senior vice president and general manager of Oracle's global energy business. Previously, he spent 18 years with oil company Schlumberger in a variety of management positions, including heading worldwide information services.

On June 2, the board appointed Capellas to become the COO, which, under the temporary realignment, was the most powerful position below the three-person Office of the Chief Executive headed up by chairman Ben Rosen. Capellas had been the chief information officer. The promotion came at the same time that John Rose, senior vice president of Compaq's enterprise group and a long-time associate of Pfeiffer, left.

His position as a recent addition to the PC maker has likely fueled his rise. Rosen and the board have cleared out most of Pfeiffer's close associates.

"We set out to find the ideal CEO, and we discovered him right here at Compaq, hard at work," Rosen said, in a statement.

Compaq's management crisis followed the ouster of Pfeiffer and immediate resignation of chief financial officer Earl Mason. Departed upper management includes Michael Heil, worldwide marketing head, Enterprise Computing chief John Rose, John Rando, senior vice president and group general manger of Services, and Hans Gutsch, who headed up human resources.

The Compaq board two weeks ago appeared ready to approach Gregory Brenneman, president of Continental Airlines, but he abruptly removed himself as a candidate. Pfeiffer was also the company's COO when he was promoted to the top spot in 1991.

Compaq is set to release second-quarter financial results on Wednesday.