Shake-up at Compaq

Compaq Computer (CPQ) should be basking in the glow of success after a strong earnings report and the unveiling of a new $60 million ad campaign intended to highlight its desire to be an end-to-end network solutions provider. Instead, executives are shuffling in and out of the company's Houston-based headquarters faster than a new Pentium Pro server processes data.

In the latest news, the company announced today that Ross Cooley, Compaq's longtime senior vice president and general manager of North America, will step down at the end of this month.

Cooley has moved on to pcOrder.com, a maker of electronic commerce systems, where he will become chairman and CEO. His compensation deal reportedly includes a salary of $1 per year plus stock options.

Cooley's position at pcOrder was previously unfilled. The company was formed in Austin, Texas, in June of this year.

His replacement at Compaq is James Schraith, whose resume includes stints as CEO of Cerplex Group, a technology outsourcer, and president and COO of AST Research.

Although Cooley has been expected leave for some time, other recent executive departures underscore a tumultuous period within the company's sprawling campus.

Doug Pushard, vice president of the Internetworking Products Group, was reportedly asked to leave the company last week. That followed a bizarre sequence in the same week in which Mark Canepa left after less than a month as vice president of the nascent Workstation Division for seemingly greener pastures within Sun Microsystems Netra server division.

Compaq officials characterized Canepa's departure as a "personal decision."

Also announced today is the formation of the Communication Products division. The company picked Alan Lutz as vice president and general manager of the new division, which includes former executive Pushard's networking products business. Lutz joins Compaq after a tenure as executive vice president of the computer systems group at Unisys.

The moves followed the recent departures of Compaq veteran Gary Stimac, former vice president and general manager of the Systems Division; Mike Lambert, vice president of marketing for North America; Gene Austin, vice president of marketing for the Systems Division; and Michael Norris, vice president of sales for North America.

Lambert left to join Dell Computer's server division, one of Compaq's principal competitors. Lambert was replaced by Robert Fernander, a Digital Equipment veteran.

Also announced was the appointment of Richard Snyder to the newly created position of senior vice president and general manager of the worldwide sales, marketing service, and support. Snyder arrives from Dell.

All of this comes as the company reported a 43 percent increase in net income--to $350 million--for the recently completed third quarter. Revenue was also up 25 percent to $4.5 billion.

The company recently reorganized into three distinct solutions-driven divisions, but analysts said the executive shuffle may have more to do with individual personalities than problems with the reorganization.

"They're growing like gangbusters in every single area," said Tony Croes, an analyst with the Currid consultancy. "It seems interesting that there are very few leaders left. I don't know how much of this is due to the reorganization--there might be some personalities [conflicts] involved."

Others believe Compaq's success has made its executive targets for competitors. "This happens quite a bit when companies become successful. Other companies then want to emulate that success," said Jerry Sheridan, analyst for market researcher Dataquest.