A Year Ago: Compaq's Pfeiffer hints at changes to come

First published: Tue, 27 Jan 1998 15:07:29 GMT
Written by Martin Veitch, Contributor

Compaq chairman and CEO Eckhard Pfeiffer gave the first hint this morning that the addition of Digital to his company's portfolio will mean a reduction in combined headcount.

Pfeiffer, in London for the announcement of new notebook, desktop and server PCs, said that he expects the Digital purchase to gain shareholder and regulatory body approval in April or May, but warned that the new Digital will have to do things the Compaq way from now on.

Asked about the disparity in earnings per employee ratio of the two companies, Pfeiffer said

he would be "looking to get Digital in higher gear using the Compaq business model", which, under Pfeiffer's stewardship has been characterised by leanness and cost-effective manufacturing processes.

"A lot has to happen at Digital in terms of efficiency," Pfeiffer added.

Separately, Pfeiffer took time out to comment on the likely position of Digital chairman Robert Palmer, making it clear that Palmer won't become Pfeiffer's right-hand man.

"I'm not going to share power with him on this level. He will run the Digital company as he does now. Obviously we're looking for an alternative job, and we're looking at how we're structuring the new firm."

Pfeiffer also bolstered yesterday's claim that Digital, even as a wholly-owned subsidiary, will retain its brand, pointing out that Digital has 40 years of history and citing the maintenance of the Tandem moniker after last year's purchase.

Finally, Pfeiffer commented on the collapsing Asian economy.

"The Asia crisis is real for everybody. For Compaq, it's less than 10 per cent of our sales in that region. There's high growth in Europe and America, and very strong growth in Latin America. We're sourcing a lot of products from Asia and we're getting the positive [benefits of a strong US] currency."

By coincidence, Digital - a company Compaq is getting to know pretty well and one which does have strong Asian sales - will also be holding a big press conference in London tomorrow. Held to herald a new development in Digital's relationship with Microsoft and Windows NT, the event should be even more interesting than originally intended.

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