Compaq To Acquire Thomas-Conrad; Forms New Internetworking Products Group
-- Compaq Broadens Line of Tightly Integrated Internetworking Product
Solutions; New Marketing and Engineering Operating Unit Moves Business
Strategy Forward

HOUSTON, October 18, 1995 -- Unveiling an internetworking business strategy
that enhances its ability to provide more tightly integrated
enterprise-class computing systems to commercial customers, Compaq
Computer Corporation (NYSE: CPQ) today announced an agreement to acquire
Thomas-Conrad Corporation -- a privately-held maker of network interface
cards and hubs -- and the formation of an Internetworking Products Group
(IPG). Thomas-Conrad will become a wholly-owned entity of Compaq Computer
Corporation and will be under IPG's management umbrella. Compaq expects to
complete the acquisition by the end of October. It is subject to
conditions including clearance under the Hart-Scott-Rodino Antitrust
Improvements Act. Financial details of the acquisition were not
disclosed.

Compaq's IPG will be a part of the Systems Division which is also
responsible for the Compaq ProLiant and Compaq ProSignia server lines, as
well as its server options business. Both announcements support Compaq's
strategy to create end-to-end, easy-to-use computing solutions -- that is,
to provide customers with clients, servers, network interface cards
(NICs), routers, hubs, and network management, all tightly integrated and
tested. As Compaq delivers on its promise of a complete line of
internetworking products, it provides customers single-vendor
accountability, Compaq-branded high performance NICs that are compatible
with all x86 computers, and hub and router solutions that lead to tightly
integrated products which are easy to deploy in client/server networks.

"Compaq expects internetworking products such as hubs, routers and NICs to
play a significant role in the rapid adoption and expansion of the
client/server marketplace," said Gary Stimac, senior vice president and
general manager, Systems Division, Compaq Computer Corporation. "Compaq's
systems business strategy is to simplify the deployment of client/server
computing systems while reducing the overall cost of owning and
maintaining those systems. In line with that strategy, we are building a
world-class internetworking business and are preparing to be a leader in
this industry within the next few years," predicted Stimac.

Compaq is the market share leader in x86-based servers with 41% share
worldwide (NOTE 1).

THOMAS-CONRAD OPERATION BRINGS KEY BUSINESS AND PRODUCT VALUE

The acquisition of Thomas-Conrad offers several key benefits to Compaq:
established product lines, proven high-quality engineering of hardware and
software, manufacturing capacity and an established sales, service and
distribution network. Compaq plans to merge its NetFlex family of NICs,
offering both 10Mbps and 100Mbps technology, with the broad Thomas-Conrad
product line. This merging of products will increase Compaq's market
penetration in the NIC business and offer Compaq an additional source of
revenue from the sale of NICs for use in third-party computing platforms,
including desktops and servers.

"The more Compaq NICs connecting to Compaq hubs and routers, the better
Compaq can integrate the entire client/server computing system," said Doug
Pushard, vice president, Compaq Systems Division IPG. "Thomas-Conrad and
Compaq have a history of cooperation. Each organization has supported both
the Fast Ethernet and VG AnyLAN standards, and earlier this year we both
participated in an industry analyst tour to promote our position of joint
support."

Thomas-Conrad also gives Compaq access to top-quality network hubs and the
engineering expertise which created them. Along with this hub experience
comes substantial expertise in network management software.
Thomas-Conrad's product, Sectra, represents an outstanding network
management achievement that Compaq intends to integrate into its overall
plans for developing and distributing a network management platform that
integrates with Compaq Insight Manager, Compaq's software program for
managing network desktops and servers.

"Consolidation in the internetworking industry has increased dramatically,
having a considerable impact on today's competitive environment. Companies
are looking for integrated computer and networking solutions that are both
innovative and cost-effective," said Robert Vieau, president and CEO of
Thomas-Conrad Corporation. "We are very pleased to announce our
relationship with Compaq Computer Corporation, whose industry leadership
and market presence can significantly enhance Thomas-Conrad's ability to
provide the best value in managed, high-speed networking solutions."

With about 200 employees, Thomas-Conrad also offers Compaq a quality
manufacturing operation capable of delivering 100,000 printed circuit
boards per month. This factory capacity will be used to manufacture Compaq
internetworking products and represents a strategic asset in Compaq's
overall internetworking business.

INTERNETWORKING PRODUCTS GROUP

Today, Compaq also announced the appointment of Doug Pushard as vice
president of the Internetworking Products Group, a unit within Compaq's
Systems Division. Pushard joined Compaq in 1989 and was most recently the
director of product planning for the Systems Division where he was
responsible for formulating the division's long-term strategic direction.
Previously Pushard was manager of UNIX Systems Marketing for Compaq --
responsible for all UNIX marketing activities, including product planning,
product strategy and marketing programs.

Pushard has already assembled an internetworking team from communications
industry firms including AT&T, Bay Networks, CrossCom, DCA, Emulex, GTE,
IBM and Motorola. The team has experience totaling over 100 years in NICs
and ASIC technology, 50 years in hubs/routers and over 25 years in network
management, Pushard said.

INTERNETWORKING BUSINESS STRATEGY

In 1989, Compaq created the PC server market with the introduction of the
Compaq Systempro. Since the introduction of this product, Compaq has
become the leader in industry-standard servers for file/print and
application server environments. Compaq achieved this leadership position
in the server market by consistently introducing products that are the
price/performance leaders in their class. Compaq will follow a similar
strategy for its internetworking product lines.

The company plans to deliver tightly-integrated, well-optimized and easily
managed internetworking products at the best price/performance in their
class by leveraging its volume buying power of industry- standard
components. Following this strategy, Compaq intends to establish itself as
a leader in the internetworking market.

INTERNETWORKING PRODUCT PLANS IN PROGRESS

On June 26, 1995, Compaq announced a strategic partnership with the
internetworking industry leader, Cisco Systems. Compaq and Cisco agreed to
integrate Cisco's Internetworking Operating System (IOS) software on an
x86-based industry-standard Compaq platform, an internetworking industry
first. The routing product based on the Compaq/Cisco agreement will be
announced in the first half of 1996.

As a part of the Cisco announcement, Compaq announced its intent to develop
a complete line of internetworking products, including hubs, remote access
and network management products. The network management products Compaq
develops will integrate with Compaq's server management product, Compaq
Insight Manager, and will also integrate well with other industry products
such as IBM's NetView and HP's OpenView. Today's announcement further
delivers on Compaq's stated internetworking product line intentions.

INTERNETWORKING MARKET DATA

Compaq estimates it will ship 1.6 million NICs in 1995, including options
and embedded NICs shipped in servers, commercial desktops, and portable
docking stations. The total market for NIC shipments in 1995 is estimated
by IDC to be 28 million units. Compaq's total domestic market share will
be approximately 8 percent of the ethernet and token ring markets after
the Thomas-Conrad acquisition. Compaq will be one of the top five largest
suppliers of NIC technology, along with 3Com, SMC, and Intel (NOTE 2).

COMPANY BACKGROUND

Compaq Computer Corporation is the world's largest supplier of personal
computers, offering desktop PCs, portable PCs and servers. Founded in
1982, the Company reported 1994 worldwide sales of $10.9 billion. Compaq
products are sold and supported in more than 100 countries throughout the
world. Compaq also sells directly to customers through Compaq Direct Plus
at 1-800-888-5858. Compaq provides 24-hour customer support and can be
reached through the Compaq forums on America Online, CompuServe, Internet
(http://www.compaq.com), and Prodigy, or by calling 1-800-345-1518.

 NOTES 1: IDC figures for 2Q95.
       2: ibid.
 
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