Eckhard Pfeiffer may have lost his job this weekend, but Compaq's problems really began way back in January last year when it announced the acquisition of Digital, analysts said today.
The company's shock announcement yesterday that chief executive officer, Eckhard Pfeiffer and his chief financial officer, Earl Mason, had resigned, was the culmination of what has been a year long downhill struggle for Compaq.
Pfeiffer's departure was almost certainly forced after he and Mason met the Board of Directors on Saturday. It follows only 10 days after the company issued a profit warning for its first quarter, citing a slowdown in PC sales combined with competitive pricing pressures.
But there may be more to it, not least the fact that the company faces a barrage of class action lawsuits. These accuse it of issuing misleading statements regarding PC sales to artificially inflate its stock price, during which time many senior executives sold stock. (see Newswire 26 March)
Peter Lemon, senior research manager at IDC, commented: "It really all started with the Digital acquisition. The company has repeatedly told us that the integration of the two companies has gone really well and that it is almost completed, but it's clearly not."
Andy Butler, research director at Gartner Group, said Compaq's aggressive growth strategy and target of being a $50 billion company by the end of 2000 was damaged by the Digital takeover.
"We were convinced that the Digital acquisition was going to make a plateau period inevitable. The task of getting rid of unwanted products and even people was going to offset all the growth of the original Compaq company. Pfeiffer's departure is the penalty Compaq must pay to the financial analysts for that," he said.
Analysts agreed that Compaq needed to find an answer to its lack of leader and of strategy very fast.
For the full reaction to Pfeiffer's departure, see today's analysis.
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