Compaq's Pfeiffer: Others
should worry
By Reuters
Special to CNET News.com
April 13, 1999, 12:45 p.m. PT
HOUSTON--The head of Compaq Computer said today
that the slack demand and price-cutting that led to his
company to warn its earnings would fall short of
expectations also could hurt rival computer makers.
Compaq chief executive Eckhard Pfeiffer said he was waiting to
see if the weak demand and price competition showed up in
his rivals' earnings.
"I'm waiting for the results of everybody else in the industry,"
Pfeiffer said.
"That will be interesting, because I've talked to a lot of people
and they have generally confirmed that it was a very tough
quarter," he said at Compaq's Innovate Forum 99, a gathering
of customers, analysts and news media.
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Since the company warned Friday that its earnings for the first
quarter would fall far short of Wall Street expectations,
analysts and at least one other top industry executive have
said the problems cited by Pfeiffer were more specific to
Compaq rather than industrywide.
Compaq said Friday it expected to report next week that in the
quarter ending March 31 it earned 15 cents a share--well below
analysts' estimates of 31 cents--on lower-than-expected
revenues of $9.4 billion.
Analysts have said they believed the first quarter weakness
was largely unique to Compaq.
They said the company might have been hurt by retailer
resentment as it stepped up
efforts to sell directly to computer
buyers and by its efforts to digest
Digital Equipment, which it
bought last summer for $8.4
billion. Hewlett Packard chief
executive Lewis Platt today said
his company's personal computer
business remained healthy and
profitable, despite warnings by
key rivals that the best years of
the PC business may be over.
Speaking to reporters at the New
York Stock Exchange, Platt took issue with warnings by
Compaq of weak near-term PC demand and mocked IBM
Chairman Lou Gerstner's widely quoted view that the PC era is
over.
But Pfeiffer said there had been indications from other
computer firms that they also suffered in the quarter, meaning
that Compaq, the world's No. 1 personal computer maker, was
not alone.
Compaq said demand for business computers was down in the
first quarter, which forced price-cutting and hurt margins.
Pfeiffer said there were plenty of analysts' reports out there
confirming the industry's plight.
"You read several analyst reports who have also gone and
looked at what is happening--what growth is in the small and
medium business markets, for example--and they've come
back and said it's single-digit only. It was expected to be in the
mid-teens," he said.
Pfeiffer's discussion about the industry's problems came in
response to a question about whether the factors hurting
Compaq in the first quarter were now easing up. He said the
company would talk more about current and future conditions
when it announces results on April 21.
Story Copyright © 1999 Reuters Limited. All rights reserved.
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