By Molly Williams Of THE WALL STREET JOURNAL SAN FRANCISCO (Dow Jones) Compaq Computer Corp. (CPQ) is expected to announce it will use Intel Corp.'s (INTC) Itanium processors in all its server products, replacing the Alpha processors that Compaq gained as part of its $9.1 billion acquisition of Digital Equipment Corp. three years ago, according to a person familiar with the agreement. As part of the agreement, Intel will hire several hundred Compaq engineers that worked on designing Alpha products, the person said. Intel Chief Executive Craig Barrett and Compaq Chief Executive Michael Cappellas will announce the agreement at a news conference later today in New York. Financial details weren't available. Compaq's sales of Alpha and Himalaya fault-tolerant machines, which will all run on Itanium-based processors now, were $3.2 billion last year. The agreement is a boon for Intel as the chipmaker gains a major customer to build products with its newest chip. Itanium, which was just released formally a few weeks ago but has been under development for many years, is Intel's effort to get its chips into the heart of the heavy-duty computers that do most of the work in a corporate environment. For Compaq, it is likely to be seen as a disappointment, as Alpha was considered a key asset of Digital when Compaq bought the computer maker in 1998. It also may hurt near-term sales as Compaq makes the transition. Still, it may be seen as an incremental positive by some analysts who believed that Compaq should concentrate its efforts and not be trying to sell so many different kinds of computers. All the software that currently runs on the Tandem and Alpha machines will be written to run on Itanium. Products with the new Itanium and other products in that family will be out in about two to three years. -By Molly Williams, The Wall Street Journal; [EMAIL PROTECTED]; 415-765-6118 (END) DOW JONES NEWS 06-25-01 07:45 AM
