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Businessweek Archives

Eckhard Pfeiffer: In Tandem With Tandem

In Business This Week: HEADLINER


A year ago, he vowed to double annual revenues by 2000, pushing Compaq Computer to $40 billion in sales. And CEO Eckhard Pfeiffer isn't one to miss a target. On June 23, he gave himself a little boost by agreeing to buy struggling Tandem Computers, the largest maker of "fault-tolerant" computers.

The stock deal, valued at around $3 billion, does two things: It gives Pfeiffer $2 billion a year from sales of Tandem systems, which are used to run bank ATM networks, stock exchanges, and phone switching centers. And it gives Compaq 4,000 sales and service experts used to dealing with big corporate buyers, doubling Compaq's force. "It accelerates our plans dramatically," says Pfeiffer. Compaq is also getting Tandem for a song, paying just 1.5 times sales.

The deal comes after Compaq kicked the tires at $14.5 billion Digital Equipment, among others. Is Tandem the consolation prize? Not according to Pfeiffer: "This is the one we wanted to make," he says. Now he has to make the combo work.EDITED BY KELLEY HOLLAND By Gary McWilliamsReturn to top


THE SUPREME COURT HAS halted a $1.3 billion global settlement between 20 manufacturers of asbestos and hundreds of thousands of current and future claimants. In a 6-2 decision on June 25, the court took issue with the settlement's equal treatment of current and future claimants. The ruling stands to make it far more difficult to reach large settlements in future class actions. In recent years, public advocates have complained that plaintiffs and defense attorneys have been too quick to reach class-action settlements that don't reflect the interests of all members of the class. The court said that under a federal court rule, a class had to have common interests and characteristics and this class didn't meet that standard. A spokesman for the asbestos makers says: "We are determined to alleviate the backlog of individual claims that are clogging the nation's courts."EDITED BY KELLEY HOLLANDReturn to top


LET THE TELEMARKETING blitz begin. Starting next March, Connecticut residents must pick a local phone company as the state becomes the first to deregulate fully its local service. Those who don't choose will be assigned to 1 of 21 carriers at random, state regulators have decided. Southern New England Telecommunications (SNET) is not happy about the sweepstakes. The former local monopoly had hoped to be the default carrier--automatically assigned to consumers who won't make a choice. Now that it won't be, the company is warning that 1998 earnings could be hurt.EDITED BY KELLEY HOLLANDReturn to top


REMEMBER THOSE EXXON ADS claiming that high-octane gas keeps car engines cleaner and reduces maintenance? Get ready for a very different campaign. In a landmark settlement on June 24, the Federal Trade Commission announced that Exxon would run new ads advising consumers that for most cars, regular gas has the right octane. The settlement follows a September, 1996, FTC complaint charging Exxon with misleading consumers by making unsubstantiated claims about high-octane gas. Beginning in September, the 15-second ads will run in 18 major metropolitan markets.EDITED BY KELLEY HOLLANDReturn to top

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