COMPAQ TO ACQUIRE DIGITAL FOR $9.6 BILLION

             Creates the Second Largest Computing Company in the World


NEW YORK, January 26, 1998 - Compaq Computer Corporation (NYSE: CPQ) and Digital
Equipment Corporation (NYSE: DEC) today announced the completion of a definitive
merger agreement. As Compaq continues its drive to become the global  leader  in
enterprise computing solutions, this latest acquisition greatly accelerates  its
momentum and strengthens its value proposition to customers.

"We put tremendous value on the customer relationships  Digital  has  cultivated
over the past 40 years. We  are  committed  to  supporting  these  key  customer
relationships by investing  in  Digital's  strategic  assets,  particularly  its
worldwide service organization, as well as  its  64-bit  leadership  with  Alpha
microprocessors, OpenVMS, Digital UNIX and Windows NT enterprise  systems,  open
storage and software  products,"  said  Eckhard  Pfeiffer,  president  and  CEO,
Compaq.

"Digital's focused enterprise strategy coupled with demonstrable improvements in
operational performance make this a timely choice for  us,"  Pfeiffer  said.  In
Digital's recently reported second quarter,  profits  doubled  and  the  company
experienced tremendous growth in its target markets.

The transaction will be the largest acquisition in the history of  the  computer
industry, valued at $9.6 billion based on the January 23, 1998 closing price  of
Compaq common stock. Under the terms of the transaction, shareholders of Digital
will receive $30 in cash and approximately 0.945 shares of Compaq  common  stock
for each share of Digital stock. Compaq will  issue  approximately  150  million
shares of Compaq common stock and $4.8 billion of cash. Under the terms  of  the
agreement, Digital will become a wholly owned subsidiary of Compaq.

"The combined companies will provide significant economic value growth  for  our
shareholders," said Earl Mason, chief financial officer of Compaq. "In addition,
the combination will  be  accretive  within  a  year,  meeting  all of  Compaq's
economic tests."

"This merger gives Digital tremendous reach and credibility in the marketplace,"
said Digital Chairman Robert B. Palmer. "It gives us the scale and resources  to
make continued investments in our key technologies and services. Customers  will
benefit from the very complementary strengths of both  companies.  For  example,
together we will  offer  customers  the  greatest  concentration  of  enterprise
Windows NT products and lifecycle services available in the market today."

Pfeiffer said the combination achieves Compaq's stated goal of becoming  one  of
the top three global IT companies. More importantly, it creates a new  breed  of
enterprise leader; one committed  to  delivering  high  customer  value  through
standards-based, partner-leveraged computing that features world class lifecycle
services   and   support,   market-segment   focused   solutions,   particularly
communications, manufacturing and finance, and enterprise technology excellence.

The combined company will create  the  largest  channel  network  in  the  world
delivering over 80 percent of its products and solutions to customers.  Compaq's
field resources  will  continue  to  complement  the  strong  reseller  channel,
focusing on building enduring customer relationships worldwide. These  resources
include  individuals  dedicated  to  pre-sales  and  sales  account  management,
professional and consulting services and global service and support.

The acquisition of Tandem Computers in 1997 extended the  company's  addressable
market with high-end, mission-critical  solutions  and  doubled  the  sales  and
service field resources. In 1998, the Compaq/Digital/Tandem combination  further
strengthens the focus on creating competitive advantage for enterprise customers
by delivering the widest range of technology based  solutions  from  hand-helds,
notebooks, desktop computers, workstations, servers; high-end servers  based  on
the 64-bit Alpha architecture and highly available and scalable NonStop systems.

Subject to the approval of Digital's shareholders as  well  as  clearance  under
antitrust laws and  other  customary  closing  conditions,  the  transaction  is
expected to be completed in the second quarter of 1998.


Company Backgrounds

Compaq Computer Corporation, the world's largest  computer  manufacturer,  is  a
Fortune 200 company and the  largest  global  supplier  of  personal  computers.
Founded in 1982, Compaq develops and markets hardware, software,  solutions  and
services  including  industry-leading  enterprise  computing  solutions,  fault-
-tolerant business-critical solutions, networking and  communications  products,
commercial desktop and portable products and consumer  PCs.  The  company  is  a
leader in environmentally friendly programs and business practices.

Compaq products are sold and supported in more  than  100  countries  through  a
network  of  authorized  Compaq  marketing  partners.   Customer   support   and
information about Compaq and its products are available at www.compaq.com or  by
calling  1-800-OK-COMPAQ.  Product  information  and  North   America   reseller
locations can be obtained by calling 1-800-345-1518.

Digital Equipment Corporation, recognized for product  and  service  excellence,
is a leading supplier of high-performance, Web-based computing solutions,  which
help enterprises compete in the global marketplace. Digital gives its  customers
a winning Internet advantage  through  a  comprehensive  portfolio  of  Internet
solutions based on award-winning systems,  advanced  networking  infrastructure,
innovative software, and  industry  applications  -  including  those  from  its
business partners. The  expertise  and  experience  of  Digital  employees  help
customers plan, design, implement, manage  and  support  Internet  solutions  in
countries throughout the  world.  For  the  latest  company  information,  visit
Digital   on   the   World   Wide   Web   at    http://www.digital.com    and/or
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