Signal That Firm’s ‘Problems May Go Deeper,’ Analyst Says : Pampel Resigns as Apollo Computer President

Apollo Computer, which jolted the computer industry July 7 by announcing that it expects second-quarter losses, surprised observers again Friday with news that its president and chief operating officer has resigned.

Roland D. Pampel, Apollo’s No. 2 man for two years, said he will leave the maker of computer workstations to take a post as chief executive at an unidentified company. “I’ve wanted to become a CEO, and now I’ve found a way to do it,” Pampel said from Apollo’s Chelmsford, Mass., headquarters.

Despite Pampel’s insistence that his departure is only to further career goals, several Wall Street analysts said it raised further questions about a company locked in a tough competitive battle. “There’s no question this is related to the losses,” said Timothy R. McCollum, analyst with Dean Witter Reynolds in New York. “This suggests the problems may go a lot deeper than what they’ve talked about.”

In 1980 Apollo pioneered an important industry niche when it began manufacturing workstations, powerful microcomputers that are equipped with advanced microprocessors and sophisticated graphics software to handle scientific and engineering tasks. Since then, the industry has become crowded with other companies, including some that analysts say have slicker marketing programs than Apollo’s.

While most observers give Apollo’s product line high marks, the largest market share in the workstation business is held by Sun Microsystems, which sold 30% of all workstations last year, according to Gartner Securities in Stamford, Conn. After Sun are Digital Equipment, which sold 23% of workstations last year; Apollo, 19%; Hewlett Packard, 15%, and International Business Machines, 5%, according to Gartner.

A number of makers of personal computers are also crowding into the booming market, which has seen unit sales jump 75% in the past year, Gartner said.

Last week Apollo said it expected to lose between $5 million and $8 million for the quarter ended June 30. Apollo said revenue for the period will be about $145 million, 10% higher than last year but some $40 million short of analysts’ expectations.

The company blamed poor results from a German unit that had misestimated demand from a key customer, price cuts and the effect of delays in new product announcements.

Russell Crabs, a Gartner analyst, said these problems are evidence that “they need serious changes in the marketing end of things.”

Apollo’s shares closed at $10.50, off 37.5 cents, in trading on the over-the-counter market.