A year ago: Compaq's Eckhard flees to London
Great Stan of Haircuts talks at gruesome hotel
We have spoken of The Landmark hotel before in these pages. It is distinguished by having an atrium full of very tall palm trees, which does not necessarily fit the profile of Baker Street, a mere five minutes away. Here, last Tuesday morning, was assembled a group of hacks to hear Eckhard Pfeiffer, CEO of Compaq-Digital-Tandem, outline the reasons for the proposed acquisition of Digital and to give said hacks some background. Pfeiffer, being our Man of the Year 1997, could not resist returning to his bean counting days and spelling out the ROI (return on investment, not King) figures for last year's financial results. "When we began built to order in Houston, it enabled us to become very price competitive, undercutting Dell and Gateway. We've improved our return on invested capital. Tandem is kicking in on a very similar model. If you look at Compaq alone, the ROI is 139 per cent." But pretty soon he got down to the nitty gritty, which we report here. Eckhard said: "We've just got here from New York. On Thursday, we had a board meeting to discuss the plan. We got the question from analysts earlier, what are you going to do with the $6.8 billion cash? "We've been saying for quite a while our key focus is on the enterprise. We saw the opportunity but we did not have all the resources. It is possible to run on NT but at Compaq we realised that in many bidding situations we couldn't offer everything our customers wanted. "There was a space in between Compaq and Tandem and that was the origin of the idea to acquire another company. Services and support is a huge opportunity but for truly global services and support, Compaq had to rely on many, many partners." The other attraction, he said, was Digital's huge customer base and its product portfolio. "Digital has a very rich heritage in terms of products and technologies and we see the ability to participate in large scale enterprises. One example is that Digital won a $1.6 billion contract with the US Post Office. Compaq was not ready to step up to the table and we clearly wanted that capability. "Compaq had 2,000 sales executives. We added 1,500 more with Tandem and now we're adding 14,000. "Clearly we said we wanted to do it all and at the same time we are the market leader in consumer PCs. It takes us immediately in terms of sales to the number two worldwide. We thought it would take $50 billion to get there but we just passed HP. If you take out HP's test and equipment, we're $2.5 billion ahead of them. "Compaq is now number one in the world in terms of NT. Compaq alone is the number one customer of Microsoft in the world. "It is clearly a major step in the enterprise strategy. Compaq is moving in as the leader in standards based computing. "The Alpha configuration is also important. Tandem has tremendous vertical markets and so does Digital. Digital has always been known for its rich technology that was never fully utilised. We hope we can take that much, much further. "The credibility of Digital will rise dramatically, it has leadership with 64-bit technology and with Alpha, Open VMS and Digital Unix. ®
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