Computer Giant Olsen to Retire
In a stunning finish to a legendary career, Digital Equipment Corp. founder Kenneth H. Olsen announced his retirement Thursday, leaving the computer giant as it attempts to climb out of a deep slump.
He recommended that Robert B. Palmer, Digital’s vice president of manufacturing, succeed him as president, effective October 1.
Olsen’s unexpected announcement came on the same day that John A. Young, president and chief executive of Hewlett-Packard Inc., announced his retirement. He will be succeeded by Lewis E. Platt, an executive vice president.
Although Digital and H-P are direct competitors and share a rich heritage as pioneering influences in the computer industry, the circumstances of their top executives’ departures could hardly have been more different.
Digital has been struggling to adjust to an industrywide shift away from large, centralized computer systems such as the venerable DEC VAX toward increasingly powerful personal computers and engineering workstations. Digital’s problems have intensified over the last year, with a mass exodus of senior managers, deteriorating employee morale, financial losses and the company’s first-ever layoffs.
Olsen, 66, has been sharply criticized for an autocratic style and seemingly erratic strategy, and some analysts have even called on him to resign. But few expected him to leave in the middle of the company’s crisis.
For his part, Olsen routinely dismissed questions about succession as irrelevant, and his hand-picked board of directors showed no signs of defying him.
Olsen said in a statement that he was stepping down from the Massachusetts company he has run for 35 years because “it’s time for the next generation of management to assume leadership.” A Digital spokesman said the decision to leave was Olsen’s alone, and that there were no health or family problems behind the move.
Olsen, a gruff, austere man admired for his integrity, founded Digital with his brother and a classmate from the Massachusetts Institute of Technology. He built it into the world’s second-largest computer firm--after International Business Machines Corp.-- becoming a model for generations of computer entrepreneurs.
Wall Street analysts expressed amazement at the timing of Olsen’s retirement. “I’m shocked,” said William Milton, an analyst at Brown Bros. Harriman & Co., according to wire service reports. “I don’t know what to think.”
The departure of H-P’s Young, by contrast, which is effective Nov. 1, was the result of a two-year succession planning process and a longstanding commitment by top managers to leave at about age 60. Dean Morton, 60, who served with Young as part of the office of the president, will also resign from the company.
As recently as last year, Young, 60, was on the hot seat as H-P’s earnings languished and founder and Chairman David Packard reasserted his authority at the venerable Palo Alto company. But the results soon began to turn around.
Platt, the new CEO, will assume the helm of a company that’s considered to be on a sound footing competitively and financially.
Platt, 51, a 26-year veteran of H-P, now runs the company’s worldwide computer systems organization.
