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Pfeiffer hopeful on DEC deal
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June 12, 1998: 2:33 p.m. ET
Compaq CEO grapples with buyout, still aims for $50B in sales despite job cuts
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NEW YORK (CNNfn) - Compaq Computer Corp.'s top executive said Friday the company faces a tricky integration of two newly acquired companies but affirmed the PC giant's march toward $50 billion in annual sales by the year 2000.
CEO Eckhard Pfeiffer, a day after wrapping up the $8.4 billion buyout of Digital Equipment Corp. and unveiling plans to cut another 2,000 in-house jobs, justified the cuts as necessary to combat "more redundancies" after the buyout than first thought.
"As we worked through the Digital numbers… what we found was that in the restructuring, in the integration of the two companies, there will be more redundancies, and some of them are on the Compaq side," he said during an interview with CNNfn Friday.
As the dust of the job-cuts announcement settled in on Wall Street, shares of Compaq (CPQ) were cool to the news, off 5/16 at 27-3/4. The Houston-based company announced the cuts after the closing bell Thursday.
Pfeiffer said Compaq hopes to tap Digital's customer base, shake up its worldwide team of account executives and recalibrate its global manufacturing operations in the integration.
Compaq, the world leader in PCs, has led an ambitious growth plan at a less than propitious time. Asian markets are in turmoil and the computer business has lagged of late, but Pfeiffer is still confident.
"The computer market has not been as strong as it used to be in years past; growth in the PC segment so far this year has been in the low teens," he said. (210K WAV) or (210K AIFF)
"The key obviously is to bring about this significant integration," he added.
Compaq said it is currently on track to post revenues of about $50 billion in the year 2000, up from $24.5 billion in 1997 and an expected $37 billion in the current fiscal year.
The PC giant is also in the throes of integrating Cupertino, Calif.-based Tandem Computers Inc., which Compaq bought last year.
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