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Compaq silence on everything deafens universe

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Analysis Since we revealed Compaq's local difficulties with NT earlier this autumn, the silence from the company has been deafening. It isn't just journalists from The Register who have had this experience - a straw poll amongst our IT press colleagues reveals a sad tale of silence and unanswered calls. And Compaq's share price on Wall Street has resembled an Ariana Eurospace rocket, sitting quietly on the pad and going nowhere, especially not stratospheric. It's currently languishing at around the $21 mark and has lurked in the low twenties for some good time now. So what is happening at Compaq? Right up until Eckhard Pfeiffer was dumped as the company's CEO, Compaq was very pro-active on the publicity front. When he left, the triumvirate headed by Ben Rosen, quite reasonably kept their heads below the parapet as the rest of the world speculated wildly whether Oracle's Ray Lane or Intel's Paul Otellini would get the high profile job. The surprise announcement of Michael Capellas as the CEO was briefly accompanied by a flurry of press activity, while, behind the scenes, senior exec Enrico "the cloak" Pesatori prepared the ground to dump Windows NT for Alpha. What do we know? The botched way Compaq handled the dropping of Alpha NT gave every single competitor the chance to leap into action and attempt to exploit the gaffe, according to Terry Shannon, editor of newsletter Shannon knows Compaq. He tells The Register that he has received many emails from European Alpha NT customers who were approached by HP, Sun, IBM and SGI as soon as the disaster went public. Dell, says Shannon, started to approach Compaq customers in the US about an Alpha migration programme. He says: "The one vendor these customers did not hear from in timely manner was Compaq itself." The Usenet forums were full of damaging speculation and criticism about Compaq. The way forward for customers disappointed by the Alpha NT decision was either to move to x.86 based NT systems or migrate to Tru64, Open VMS or Linux. Meanwhile, other areas of Compaq's business are veiled in mystery. We understand that its core Tandem business is performing well, and that's to be expected. Getting the blue screen of death when you're popping along to draw out beer tokens from your ATM doesn't play well with the big banks. And reports say that its PC server business continues to perform strongly. This business unit suffered intensively when it found its sales force competing against boys and girls from the previous DEC sales team. Earlier this year, Compaq re-negotiated its terms and conditions with its Taiwanese suppliers. That move was intended to give it a fighting chance against Dell, which was hoovering away PC sales because of Compaq's tardiness in moving to a direct model. We still await hard details about the further redundancies that Compaq is expected to make sooner rather than later. However, through this dank gloom, Wall Street analysts see some light, which hopefully will not turn out to be a will-o-the-wisp. In the last week or two, many brokers have switched from their previous position of hold to recommend either a moderate buy or a strong buy. We said some while ago that we felt the shares were undervalued and at around $20 or so, they're quite possibly a bargain. Pfeiffer, like anyone else, may have had his faults as Compaq's CEO. But he was aware that to satisfy both shareholders and customers his firm had to make sure it was putting out as positive a message as possible, and as regular as decorum allowed. So if Compaq is on the mend again, as we suspect, it could be that it is not doing nearly as well a job on the PR and marketing side as it should be. This is an Achille's Heel for the big Q and suggests, along with the Alpha NT debacle, that there's serious internal disruption on the marketing front. Pfeiffer may have been considered by many as rather a plodding, methodical speaker. But at least he talked. ®

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