Eckhard Pfeiffer

Eckhard Pfeiffer (born August 20, 1941, in Lauban, Germany [now Lublań, Poland]) is a businessman of German ancestry, who served as president and CEO of Compaq from 1991 to 1999.

He is a fan of fast cars and has owned a Porsche 911 Turbo and a 1962 roadster version of the Mercedes-Benz 300 SL.

Pfeiffer joined Texas Instruments as a financial controller in Munich after graduation, and later became head of the company's European marketing division.

Pfeiffer joined Compaq from Texas Instruments, and established operations from scratch in both Europe and Asia.

Pfeiffer was given US$20,000 to start up Compaq Europe.

He graduated from Kaufmaennissche Berufsschule in 1963, and later received his MBA from Southern Methodist University, Dallas, Texas.

He opened up Compaq's first overseas office in Munich in 1984.

By 1990, Compaq Europe was a $2 billion business, and foreign sales contributed 54 percent of Compaq's revenues.

Under Pfeiffer's tenure as chief executive, Compaq entered the retail computer market with the Presario which made them one of the first manufacturers in the mid-1990s to market a sub-$1000 PC.

In order to maintain the prices it wanted, Compaq became the first first-tier computer manufacturer to utilize CPUs from AMD and Cyrix.

When Michael S. Swavely retired as president of Compaq's North American division on July 12, 1991, Pfeiffer was named to succeed him.

Pfeiffer also received the title of Chief Operating Officer.

Pfeiffer became president and CEO of Compaq in 1991, as a result of a boardroom coup led by board chairman Ben Rosen that forced co-founder Rod Canion to resign as president and CEO.

The two price wars resulting from Compaq's actions ultimately drove numerous competitors from the market, such as Packard Bell, and by 1994 Compaq had overtaken Apple Computer and even surpassed I.B.M. as the top PC manufacturer.

Compaq's inventory and gross margins were better than that of its rivals which enabled it wage the price wars.

In 1996, despite record sales and profits at Compaq, Pfeiffer initiated a major management shakeup in the senior ranks.

Pfeiffer's vision was to move Compaq beyond its main business of manufacturing retail PCs and into the more lucrative business services and solutions that IBM did well at.

Earl Mason, hired from Inland Steel effective in May 1996, immediately made an impact as the new CFO.

Under Mason's guidance, Compaq utilized its assets more efficiently instead of focusing just on income and profits, which increased Compaq's cash from $700 million to nearly $5 billion in one year.

Also Compaq's return on invested capital (after-tax operating profit divided by operating assets) has doubled to 50 percent from 25 percent in that period.

Pfeiffer also made several major acquisitions.

In 1997, Compaq bought Tandem Computers, known for their NonStop server line.

This acquisition instantly gave Compaq a presence in the higher end business computing market.

He was named as one of Time "Cyber Elite Top 50" for 1998.

Pfeiffer's father was a prisoner of war during World War II, while Pfeiffer and his mother fled the advancing Soviet troops.

In 1998, Compaq acquired Digital Equipment Corporation, the leading company in the previous generation of computing during the 1970s and early 1980s.

This acquisition made Compaq, at the time, the world's second largest computer maker in the world in terms of revenue behind I.B.M.

However, Pfeiffer had little vision for what the combined companies should do, or indeed how the three dramatically different cultures could work as a single entity, and Compaq struggled as a result of a strategy that had the company caught in between the low end and high end of the market.

Mark Anderson, president of Strategic News Service, a research firm based in Friday Harbor, Wash.

In 1999, Canion admitted that his ouster was justified, saying "I was burned out. I needed to leave. He [Rosen] felt I didn't have a strong sense of urgency".

Two weeks after Canion's ouster, five other senior executives resigned, including remaining company founder James C. Harris as SVP of engineering.

These departures were motivated by an enhanced severance or early retirement, as well as an imminent demotion as their functions were to be shifted to vice presidents.

Canion had allowed competitors such as Dell Computer, AST Research, and Gateway 2000 to undercut Compaq with cheaper offerings, that led to a $71 million loss for that quarter, Compaq's first loss as a company.

An analyst stated that "Compaq has made a lot of tactical errors in the last year and a half. They were trend-setters; now they are lagging".

Rosen and Canion had disagreed about how to counter the cheaper Asian PC imports, as Canion wanted Compaq to build lower cost PCs in-house, while Rosen believed that Compaq needed to buy standard components from suppliers and reach the market faster.

While Canion developed an 18-month plan to create a line of low-priced computers, Rosen sent his own Compaq engineering team to Comdex without Canion's knowledge and discovered that a low-priced PC could be made in half the time and at lower cost than Canion's initiative.

In addition, it was believed that Canion's consensus-style management slowed the company's ability to react in the market, whereas Pfeiffer's autocratic style would be suited to price and product competition.

Rosen initiated a 14-hour board meeting, and the directors also interviewed Pfeiffer for several hours without Canion's knowledge.

At the conclusion, the board was unanimous in picking Pfeiffer over Canion.

Canion declined an offer to remain on Compaq's board and was bitter about his ouster as he didn't speak to Rosen for years, although their relationship became cordial again.