Only a week after his appointment, Compaq's new chief executive Michael Capellas faces his first challenge tomorrow, as the company announces its second quarter results.
Compaq has already warned that pricing pressures, inadequate revenue growth and a non competitive cost structure would have a negative affect on earnings for the second quarter 1999. (see Newswire 17 June
Temporary chief executive Ben Rosen said earnings would be "flat to down" sequentially from the first quarter.
Capellas, previously chief information officer at Compaq, has so far failed to significantly impress analysts who criticised the company for appointing an insider.
Jim Cassell, analyst with industry researcher Gartner Group commented: "It remains to be seen whether an insider can deal successfully with Compaq's problems."
Another Gartner analyst, Ed Thompson, said Capellas faces several challenges if he is to lead Compaq to recovery including cutting operating expenses, moving further to direct sales and fulfilment models and making better use of the Internet as a channel.
"Capellas has not yet laid out a timetable for overcoming these challenges: however, he did say that he expected 40 per cent of Compaq's business to be direct by 2001," said Thompson.
In addition, other analysts have described Capellas as an, "unknown who will have to work hard to convince the market that he is more than Rosen's mouthpiece."
For more on Compaq and HP's new chief executives see Newswire 26 July.
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