Sorry if this has been posted, a little different twist to Wednesday's announcement.
RichieH
Compaq tops Q4 estimates as services boost earnings
By Eric C. Fleming, ZDII
January 27, 1999 10:46 AM ET
Compaq Computer Corp. topped fourth-quarter expectations on Wednesday with earnings of $758 million, or 43 cents a share, on revenue of $10.8 billion. Analysts were expecting earnings of 37 cents a share, according to First Call Corp.
Services, the business Compaq (CPQ) CPQ (Nyse)
picked up from its Digital Equipment acquisition, rose to $1.7 billion from $127 million for the quarter and product sales benefited from strong holiday sales, gaining $1.9 billion to $9.1 billion for the quarter. Total revenue climbed 32 percent from the year-ago period.
Compaq has been working toward fitting Digital into its business, cutting about 20 percent of its workforce to pare down costs. The Houston-based PC maker also put in place a direct sales channel in November to go after the small business market.
The fourth quarter tends to be a strong one for the PC and server business, as consumers hit the malls and companies buy equipment for the coming year.
"Long term, if Compaq can improve on its earnings predictability, stability and quality, it should be able to support a market multiple valuation," said Ashok Kumar, a Piper Jaffray analyst, in a report.
In services, Compaq locks horns with IBM, which has been strengthening that side of its business, and EDS Corp., the U.S. leader in management consulting. For its PC market, Compaq duels with Gateway Inc. and a host of others in a market where margins are becoming tighter and tighter.
On Tuesday, Compaq said it was spinning off its Alta Vista search engine. Kumar estimates AltaVista could be worth $2 billion on the open market.
Compaq closed up 2 9/16 to 49 1/4 on Tuesday. |
