Compaq battles integration hurdles, chases profits

Despite positive growth signs, senior Compaq executives admit the company faces difficult hurdles on the Australian and New Zealand roads to recover from its Digital acquisition.

Responding to media questions about local order fulfilment difficulties, Compaq's managing director Ian Penman said: "Right now I would think we're not the favourite vendor [in the channel]." Compaq is bedding down a SAP R/3 implementation and working to overcome linkage difficulties with "other systems" serving Compaq's channel infrastructure. Penman said Compaq's "supply difficulties" will be a "thing of the past" in a few months.

In an address to media last Friday, Penman said Compaq is now "on track" to successfully absorbing Digital.

Compaq announced in October it achieved worldwide sales of $US8.8 billion for the third quarter, an increase of 36 per cent on third-quarter sales in 1997.

Citing local revenue growth of 24 per cent and a 24 per cent increase in shipments for the same quarter, Penman said: "We're now in an entirely new era."

Penman said Compaq now addresses three specific customer audiences: the enterprise, business and consumer. He said Compaq's enterprise business generates about 50 to 60 per cent of revenues.

The three business units are divided according to customer spend, and willingness to spend on value-added services such as integration and consulting services, he said.

Compaq executives also used the occasion to reposition the company as a service provider, rather than simply a vendor.

"We want to become our customers' strategic IT partner and adviser," said Paul Brandling, Compaq's enterprise general manager.

The company will also pay increased attention to its channel partners next year, with Brandling indicating 1999 will see it create a "simple channel" structure.

Penman responded to the question of whether Compaq may consider buying networking vendor Cabletron as a method of acquiring Digital's networking business, sold to Cabletron earlier this year, saying "I don't think that's a likely proposition," he said.

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