After a search in which other outside candidates reportedly turned it down, ailing Compaq Computer Corp. yesterday named insider Michael D. Capellas to replace chief executive Eckhard Pfeiffer, who was ousted by the company's board in April.
"We hit the ground running, and we're starting today," Capellas said in a late-afternoon conference call with reporters and analysts.
Capellas, 44, has been at Compaq less than a year, after senior jobs at software maker Oracle Corp. and oil-field services giant Schlumberger Ltd.
He began at Compaq as its chief information officer, then became chief operating officer on June 2. He has been responsible for overall strategic planning and efforts to streamline the global computer giant's organization and operations.
Now the world's second-largest computer company, Compaq has been hit badly by plummeting PC prices and its inability to move quickly enough to keep up with the rapidly changing computer market.
It has had trouble integrating Digital Equipment Corp., which it bought for $9 billion last year, and has announced plans to cut $2 billion in costs. The company warned last month that it would post losses this quarter; analysts have predicted they could be $250 million.
The company had been under pressure from investors to fill Pfieffer's job and those of other top executives who left in his wake. But it seemed unable to attract outside executives to take the reins. Continental Airlines President Gregory D. Brenneman and Oracle President Ray Lane were reportedly wooed by the company and turned it down.
Yesterday, the company wasn't depicting Capellas as a second-best. "In the end, the choice was easy. In a field of excellent candidates, Michael was clearly superior," wrote Compaq chairman and co-founder Benjamin Rosen in a letter to shareholders. He has been running the company as part of a triumvirate of trustees since Pfeiffer's departure.
Analysts were surprised by the appointment of an insider but said the choices were limited by the continuing strong hand of Rosen in Compaq's management.
"I think most of the potential candidates realized that Ben Rosen would continue to be a back-seat driver" at Compaq, said analyst Ashok Kumar of U.S. Bancorp Piper Jaffray Inc. "If this does not work, the blame or the buck stops with Ben."