Compaq Posts Results in Line With Warning as Sales Rise 9.7%
A WSJ.COM News Roundup
HOUSTON -- Compaq Computer Corp. reported a net loss for the
fourth quarter and earnings from operations at the high end of guidance it
offered last month when it warned of a shortfall. Revenue rose a
better-than-expected 9.7%, supported by the company's enterprise and
services businesses.
The world's largest personal-computer maker late Tuesday said it had a
net loss of $672 million, or 39 cents a diluted share, compared with
year-earlier net income of $332 million, or a 19 cents share.
Excluding items, Compaq said it would have
earned $515 million, or 30 cents a diluted
share. Analysts surveyed by First
Call/Thomson Financial expected Compaq to
earn 28 cents a share for the quarter. The
so-called whisper number, an unofficial market
projection, was for earnings of 30 cents a
share.
Items included a $1.8 billion charge for the
write-down of long-term assets, mainly from
the falling value of Compaq's stake in CMGI
Inc., a gain on sales of equity securities of $21
million, a release of restructuring reserves of $86 million, and related net
tax benefit of $537 million.
Revenue, meanwhile, rose to $11.5 billion from $10.48 billion a year
earlier. Analysts were expecting revenue to come in at $11.31 billion,
according to Multex.com.
In its profit warning last month, Compaq pegged revenue for quarter at
between $11.2 billion and $11.4 billion, or about $1 billion below what
analysts had been expecting. The computer maker said earnings, before a
$1 billion charge to write down high-tech investments, would come in
between 28 cents and 30 cents a diluted share. Analysts had expected
earnings of 36 cents a share. Compaq blamed the sales shortfall on
lower-than-expected home PC, business PC and server computer sales.
"The strength of our enterprise business, international growth and solid
services profitability offset softness in the North American personal
computer market," Michael Capellas, chairman and chief executive officer,
said in a prepared statement. Mr. Capellas noted that server and storage
revenue rose 20% in the quarter from a year earlier.
Compaq said gross margin, as a percentage of revenue, was 23.7%, up
1.5 percentage points from a year earlier, while operating expenses were
$2 billion, or 17% of revenue, down a percentage point from a year
earlier.
Looking forward, the company said it continues to expect difficult market
conditions in the first half of the year but said the company will "continue to
differentiate" itself "by developing innovative products, integrating them into
solutions and serving the global market."
Compaq said it is comfortable with analyst estimates for the full-year 2001
for earnings growth in the 20 to 25% range.
Monday, rival Dell Computer Corp. issued its own fourth-quarter earnings
warning, blaming slackening demand for computers and a softening
economy. The sector's woes have touched most of the major players,
including Hewlett-Packard Co., Gateway Inc. and Apple Computer Inc.,
plus chip giant Intel Corp. and software giant Microsoft Corp.
Earlier this month, a widely watched report from research firm Gartner
Dataquest found that the U.S. PC market had its slowest quarterly growth
in at least seven years, suffering from PC saturation and a stock-market
downturn.
The research firm said fourth-quarter PC shipments world-wide grew by
just 10.1%, or 37.9 million units. Gartner, which started compiling the
industry data in 1993, had expected world-wide growth of 17% in the
period.
Compaq reported results after the market close. At 4 p.m. on the Nasdaq
Stock Market, Compaq's shares were up 23 cents at $20.05. |
