Updates, adds quotes, share price)
By Neal Boudette
KITZBUEHEL, Austria, July 8 (Reuter) - Compaq Computer Corp
(NYSE:CPQ) said on Tuesday it expected its business in Europe to
expand faster than the market as a whole in 1997 as it broadens
its product lines to reach new consumer and corporate customers.
The company planned to launch 130 new products in Europe in
the second half of the year -- including a series of home Pcs -
while streamlining its distribution and localisation operations,
the company said at a strategy briefing.
"We think we can grow faster than the rest of the market,"
said Andreas Barth, Compaq's general manager for Europe. "One of
our goals this year is to gain market share."
With Compaq's second-quarter results due on Thursday and the
shares trading $4 higher in New York on Tuesday at $118-1/2,
Barth also said European business was "relatively good" in the
quarter. He declined to say if the results this week would meet
expectations, citing the quiet period required by U.S.
securities laws.
Barth told reporters that based on preliminary data Compaq
expected its European market share to rise to 15.4 percent in
the second quarter, up from 14.8 percent.
Sales in the European PC market as a whole were seen rising
14 percent in the second quarter, compared to growth of 8.4
percent in the first quarter, he said. They would rise 13
percent in the third quarter and 14 percent in the fourth.
The Compaq earnings report was expected to be a key
indicator for computer stocks. In May, chipmaker Intel Corp
(NASDAQ:INTC) warned second quarter results would not exceed the
first quarter levels, and cited weak European demand.
Compaq stumbled in Europe last year, and actually lost share
in the consumer segment. Meanwhile, direct marketers like Dell
Computer Corp. (NASDAQ:DELL) grew at much faster rates in the region
and saw profits soar because of their efficient inventory and
build-to-order manufacturing systems.
Compaq expected to spark European demand in the second half
by repositioning its consumer line with a home computer priced
under 1,700 marks, new mid- and high-performance retail PCs and
a portable outfitted with a CD-ROM and multimedia gear.
The PCs would give Compaq products at almost all of the
price levels that consumers are accustomed to. It lost share
last year because it only had products covering the top 40
percent of the home segment, said Toon Bouten, vice president
for consumer business in Europe.
Bouten told Reuters he expected Compaq's share of the
European consumer market to break into double digits by the end
of the year, after reaching 7.6 percent in the first quarter.
On the corporate side, Compaq would enter the market for
workstations -- brawny engineering computers -- by combining
Intel Corp.'s Pentium II computer chip with the Windows NT
operating system from Microsoft Corp.
In addition, it planned to add more networking products
while its acquisition of Tandem Corp. would allow the company to
enter the market for enterprise servers -- mainframe computers
that companies use to handle critical business transactions.
Compaq aimed to keep costs down in Europe by using
build-to-order manufacturing and having some computer resellers
install certain components like memory and hard drives. "We want
to have price partiy with the direct sellers," Barth said.
To get consumer products ready for European markets faster,
Compaq this summer would shift its localisation operations to
Munich and add a consumer development center in Dublin.
Bouten said these shifts should ensure home PCs arrive in
time for the consumer market's seasonal shopping sprees. "Prices
of components fall so fast that, if you miss the product release
by one or two months, it is very hard to make money," he said. |
