Lack of CEO doesn't slow Compaq changes

Compaq Computer aims to wrap up its search within a month, but the opening has not stopped the company from launching major initiatives and filling in executive positions.

4 min read
Compaq Computer will try to wrap up its chief executive search within a month, but the lack of a CEO has not stopped the company from launching major initiatives and filling in executive positions.

Compaq aims to hire a CEO within the next 30 days, a move that would coincide with the second quarter earnings report slated for July 28, said sources close to the company.

Meanwhile, the PC maker is pressing forward with its business goals. Tomorrow, Compaq is expected to announce that it will sell Internet portal AltaVista to venture capitalist CMGI for $2 billion in stock, according to sources.

In its core business, insiders say the company has set a goal of reaching 25 percent of its computer sales through the Web. Increasing direct sales was a major goal of ousted CEO Eckhard Pfeiffer, and the company's slow progress toward it partially led to his undoing.

Compaq has scheduled a press conference tomorrow to announce an e-commerce alliance with PCOrder , which makes software for PC inventory management and sales. Ross Cooley, a former No. 2 at Compaq, is PCOrder's CEO. Cooley has been mentioned as a possible candidate for the Compaq job.

But the well-publicized CEO search could take longer if leading candidates decline the job. Earlier today, Continental Airlines chief executive Greg Brenneman, one of two candidates mentioned most, took himself out of the running.

"I am happy here at Continental...I have asked Compaq to remove me from further consideration," Brenneman said in a statement.

Notwithstanding, Compaq has formally completed an executive reorganization that has acting chief operating officer Michael Capellas overseeing the majority of day-to-day operations, with most of the major company divisions reporting directly to him. Capellas, who had been Compaq's chief information officer, took on these responsibilities in a June 17 reorganization of the Houston-based company. Along with Capellas's elevation, Compaq is also in the process of filling other positions, sources said.

Compaq isn't the first high-tech company to put the COO in charge of core operations. Ed Zander ran Sun Microsystems for about a year before also assuming the position of president.

The reorganization streamlines Compaq into three major groups all reporting to Capellas: enterprise solutions and services group, personal computer group, and the consumer group. Compaq has placed a senior vice president and group general manager over each group: Enrico Pesatori for the enterprise, Mike Winker for PC, and Mike Larson for consumer. Peter Blackmore, senior vice president of sales and marketing, and Ed Straw, senior vice president of supply chain management, also report to the COO's office.

Heads of operational units outside Compaq's core business report directly to the office of the chief executive, a consortium of three board members, including chairman Ben Rosen. Tom Siekman, senior vice president, general counsel, and secretary; Ben Wells, acting chief financial officer; and William Strecker, chief technology officer and senior vice president of technology and corporate development lie on the same level as Capellas on the organizational chart. Capellas too reports Rosen's group.

Group managers are encouraged to be more autonomous and accountable then in the past, said sources inside Compaq.

"I think they're going to take the new organization very seriously and make sure that the three product groups are given a lot of scope to do what they need to," said Roger Kay, research manager for desktop hardware for International Data Corporation.

But Kay cautioned there remain some logistics to be worked out. "What they wanted to do was empower each group to have independent resources, so there could be some duplication between groups."

Perception problem
This lack of leadership is a serious perception problem for Compaq, said Lindy Lesperance, analyst with Technology Research. "It's pretty hard for customers and resellers to feel comfortable about Compaq right now, because there is really no one at the helm. It isn't just that they're missing a CEO, but they have other key management positions open, too."

One position Compaq will not fill is that occupied by John Rando, exiting senior vice president and group general manger of services. The newly formed enterprise group under Pesatori will absorb Rando's role.

Rando escaped nearly unscathed from the stigma attached to some other executives and had been planning to leave for some time, said people close to the soft-spoken senior vice president. He had sought unsuccessfully to gain more autonomy under Compaq for the services division and grew increasing frustrated with senior managers, sources said. His last day will be June 30.

In other news, the office of the chief executive warned employees last week that they could expect layoffs beyond those connected with the June 1998 buyout of Digital Equipment.

News.com's Joe Wilcox reported from Washington.