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Compaq set for expansion
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June 23, 1997: 8:42 p.m. ET
CEO Pfeiffer hints computer maker may go abroad for future acquisitions
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NEW YORK (CNNfn) - Compaq Computer Co. Monday set it sights on expanding outside its flagship personal computer lines.
The Houston-based PC company said it is buying Cupertino, Calif.-based Tandem Computers Inc. in a stock swap valued at about $3 billion.
Compaq will issue about 29 million shares for Tandem, giving Tandem holders 0.21 Compaq share for each of theirs. When the deal is complete, Tandem will operate as a wholly owned Compaq subsidiary.
Appearing Monday on "Moneyline With Lou Dobbs," Compaq President and Chief Executive Eckhard Pfeiffer said the deal was another step in the evolution of Compaq to a wider variety of products and services.
"Compaq traditionally is seen as a PC company, but has been moving rapidly as a computer company. To get there, we have to build additional capacity or acquire it. [In Tandem], we found the solutions capability and support and a portfolio we can richly exploit," he said.
Among the assets Tandem brings to the table, Pfeiffer said, are a range of server and encryption technologies combined with electronic commerce, messaging and security encryption applications.
"Compaq has been making investments to transition servers to the Intel and [Windows] NT environment. Compaq is offering a very rich portfolio that supplements Tandem all the way from the bottom to where Tandem's line kicks in," Pfeiffer said.
Analysts say these assets will help Compaq become a broad-based computer company.
"There's a bigger agenda here. Tandem has been in the forefront in moving to clustering [combining smaller computers' processing power to act like a mainframe]. That's one area that Compaq, along with Microsoft and Intel, want to move into," said Andrew Neff, technology analyst at Bear Stearns.
Even without any future acquisitions, Pfeiffer said, Compaq is well on the way to meeting its target of becoming a $40 billion company by the year 2000. (238K WAV) or (238K AIFF)
While there are no specific plans to look abroad for new acquisition targets, Pfeiffer said the changing marketplace could make that a reality in the future.
"We have so far not made any international acquisitions other than a minor nature. Today, the PC and computer industry is global and we will look around the globe [for candidates]," Pfeiffer said.
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Compaq
Tandem
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