Compaq Computer Corp.'s search for a CEO and a CFO led, predictably enough, to the selection of the chief executive first. Compaq had no comment on the wisdom of choosing an insider, former chief information officer Michael D. Capellas, to lead the company, but analysts were quick to weigh in with opinions. And to some, promoting a CEO from the ranks suggests that Compaq should seek a rising finance star from another galaxy.
"I would be disappointed if we didn't have a high-profile outsider. I think it's an important choice," says Bill Milton, who follows large-cap computer hardware and semiconductor companies for Brown Bros. Harriman & Co. He excoriates former Compaq CFO Earl Mason for "pushing the company's accounting to the limit," and alienating analysts, customers, and suppliers.
Industry observers note that Compaq may have lost out on some first-rate CEO prospects when chairman Ben Rosen and a team of company directors began cleaning house last spring. Their turnaround work, which included boosting direct sales against rival Dell Computer Corp., began on the same April day that Compaq axed CEO Eckhard Pfeiffer and accepted Mason's resignation.
"The fact that Ben would continue to be a backseat driver turned off the top-caliber people," says Ashok Kumar, with US Bancorp Piper Jaffray in Menlo Park, Calif. But in the senior financial role, an insider might not be such a bad choice, Kumar suggests. In fact, he believes naming Compaq's current treasurer, Ben Wells, as the company's interim CFO is "a step in the right direction."
As for what's needed in a permanent CFO, Kumar, for one, isn't picky. "I don't want to belittle it," he says, "but it is a relatively trivial task compared with [choosing] the CEO."