El-- not quick enough,,, Kumar speaks,,,
HOUSTON, Jan 25, 2000 (AP Online via COMTEX) -- Compaq Computer Corp.
reported Tuesday a 56 percent tumble in fourth-quarter profits on a 4
percent drop in revenue, dragged down by lower sales of business
computers as the company struggled to maintain its global leadership in
PCs.
Compaq managed to beat Wall Street expectations, but the results were
bolstered by a gain of $50 million in its own investment portfolio,
separate from growth from its computer business.
Compaq said it earned $332 million, or 19 cents a share, in the final
quarter of 1999, off from $758 million, or 43 cents a share, in the
year-ago quarter. Sales dipped to $10.48 billion from $10.86 billion.
Analysts surveyed by First Call/Thomson Financial had expected Compaq
to earn 16 cents per share.
Compaq released its results after regular trading Tuesday on the New
York Stock Exchange, where the company's shares were at $32 a share,
down $1. In after-hours trading, Compaq shares were trading lower at
$31.50 a share.
While Compaq leads in worldwide sales of PCs, rival Dell Computer Corp.
overtook Compaq as the No. 1 U.S. PC company in the fourth quarter,
underscoring the company's uphill battle against stiff competition,
price wars and mismanagement. But Compaq president and chief executive
officer Michael Capellas said the company is recovering and pointed to
stronger sales of consumer PCs.
'During the second half of this year we took aggressive action to
return Compaq to profitable growth, and fourth quarter results reflect
our initial success where it matters most -- in the marketplace,' said
Capellas, who succeeded ousted former chief executive Eckhard Pfeiffer
last summer.
Capellas pointed to a record $2 billion in fourth-quarter revenue in
the company's consumer computing group, up 24 percent from the year-ago
period. Revenue from Internet access and traffic bolstered those
results, the company said.
Despite some encouraging signs, U.S. Bancorp Piper Jaffray analyst
Ashok Kumar said Dell already has won the personal computing war.
'I think their time has come and gone,' Kumar said, saying one of the
only attractive things about Compaq is its relatively low stock price.
'It's a value play more than anything else.'
Kevin Knox, of the Gartner Group, countered that Compaq can continue to
be a force in the personal computer business despite Dell's strength.
'Compaq still is the No. 1 PC manufacturer in the world. A lot of
people lose sight of that,' Knox said. 'While they have lost some
share, they're still a solid supplier of PC hardware and I don't see
that changing.'
For all of last year, Compaq earned $569 million, or 34 cents a share,
compared with a loss of $2.74 billion, or $1.71 a share, in 1998. The
1998 figure reflects costs associated with the acquisition of Digital
Equipment Corp.
Revenue totaled $38.53 billion, up 19 percent from $31.17 billion in
1998.
Copyright 1999 Associated Press, All rights reserved.
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