Compaq Taps Capellas as CEO

Compaq Computer Corp. today named Michael Capellas, the company's chief operating officer, as CEO. The announcement ends months of speculation about who would fill the position left vacant by Eckhard Pfeiffer, who stepped down in April.

"We looked both inside and outside information technology to fill this position, but we found our new CEO inside Compaq," company chairman Ben Rosen said at an afternoon press conference. "In the end our choice was easy. In a field of truly excellent candidates, Michael Capellas stood head and shoulders above the rest, and this was the only offer we made."

Before the announcement, industry speculation put executives from Oracle, Sun, Nortel, and Continental Airlines on Compaq's wish list.

The Houston, Texas, company has been the focus of much criticism this year, beginning with its decision to sidestep its distribution channel and pursue a direct sales model.

Capellas says his immediate goals are a complete realignment process for Compaq, including getting cost structure in line, completing the company's management team, and lowering operating expenses.

A clear product strategy and focus, with a better job of marketing and removing product overlap from acquisitions, and using its channel to add value is the game plan for "fixing what's broken" at Compaq, Capellas said. The new CEO would not put a time frame on how long those fixes would take, but he attempted to answer the questions about channel distribution and the integration of Digital Equipment Corp. and Tandem that had plagued his predecessor in the last months of his tenure.

Regarding the channel, Capellas said: "We want to take major accounts direct, but a lot of [small and midsize business] customers want value-added people to support them. The goal was to ultimately reach a 40% direct model." He also indicated that 15,000 of the intended 17,000 head-count reductions from the Digital and Tandem acquisitions had already taken place.