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KENT Warren native leads Compaq into hazy future

By Cynthia Vinarsky

Tuesday, October 9, 2001

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The Compaq executive said the downturn in the industry is 'just a business model shakeout.'
KENT -- When Michael Capellas wants to get away from the high-stress world of the computer business, the president and chief executive of the multibillion-dollar Compaq Computer Corp. comes home to Warren.
Refreshed after a weekend spent attending a family wedding in Youngstown, Capellas discussed the highs and lows of the technology industry Monday with students, faculty and business leaders at Kent State University, his alma mater.
"I've moved 19 times in my life; I've lived literally all over the world," he said, listing Paris, London and Singapore among his former homes. "But year in and year out, home is always a very special place, and I always come back."
Capellas, who jokingly calls himself "one of the true geeks," acknowledged that the tech industry is mired in a major slump, which has negatively affected Compaq's bottom line as well.
Merger: Hit hard by sluggish computer sales, the company announced plans last month to merge with Hewlett-Packard Co., creating an $87 billion technology powerhouse.
Plans call for the merged corporation to be based in Palo Alto, Calif. and to take the Hewlett-Packard name, with Compaq continuing only as a product name. Capellas will be president, and Carly Fiorina, chairman and CEO of Hewlett-Packard, will continue to hold those titles.
Capellas talked positively about the merger plan, saying the companies have similar goals and values and should mesh well. He said the downturn in the industry is "just a business model shakeout."
"The future of computation could never be brighter," he said.
In wake of the attacks: Overall, however, Capellas is concerned about the damage the Sept. 11 terrorist attacks have done to the already-struggling economies of the U.S. and many foreign countries.
"While I'm very bullish on the future, I do believe we'll have a recession," he said, adding that he's especially concerned about the Japanese and European economies in the wake of the attacks. Global economies are crucial for Compaq, which has operations in 200 countries and gets 55 percent of its revenue from outside the U.S.
Capellas said two trends related to the terrorism -- a rise in nationalism and a new resistance to globalization -- will likely have a damaging, long-term effect on all the world's economies.
"I'm shocked at the number of people who won't travel at all now," he said, predicting that nationalism and fear of travel will put globalization three to five years behind.