The weekend drama at Compaq Computer, where Mr Eckhard Pfeiffer, chief executive, was ousted by the board of directors, and Mr Earl Mason, chief financial officer, resigned, did little to cheer shareholders yesterday.
Its shares were trading at $23 1/2 in mid-session, down $1/8 from Friday's close and near a 12-month low of $22 15/16. Compaq - which also owns Digital - employs more than 2,200 people in Ireland, with significant operations in Dublin, Galway and Belfast. While the management changes may help repair relations between Compaq and Wall Street analysts, whose confidence was shaken by the company's surprise profit warning earlier this month, several uncertainties remain.
On Wednesday, Compaq is scheduled to release its first quarter financial results. The company has warned that earnings are expected to be only about 15 cents a share, far below analysts' predictions of around 31 cents. However, it remains to be seen which segments of Compaq's business underperformed in the first quarter, and to what effect the acquisition of Digital had on earnings.
Analysts have broadly rejected Compaq's initial explanation for the earnings disappointment. Compaq said industry-wide pricing pressures and slack demand for PCs from US corporate buyers were to blame, but there is a growing consensus among industry analysts that Compaq's management failed to keep pace with rapid changes in the PC market.
Mr Ben Rosen, Compaq chairman who has taken on the role of interim chief executive while the company searches for a replacement for Mr Pfeiffer, told Wall Street analysts yesterday the management changes did not signal that first quarter earnings were expected to be worse than flagged.
With the departure of Mr Pfeiffer, the biggest question is: who will run Compaq in the future? In the meantime Mr Rosen, with two other non-executive directors, will form a temporary "office of the chief executive".
Any new Compaq chief executive faces the prospect of being second-guessed by Mr Rosen, who has been an active chairman. The next chief executive might also wonder whether he or she would eventually follow in the footsteps of Mr Pfeiffer and his predecessor, Mr Rod Canion, both ousted by Mr Rosen.
