By David B. Wilkerson, CBS MarketWatch
Last Update: 8:29 PM ET May 8, 1999
Earnings Surprises
Market Snapshot
Compaq (CPQ: news, msgs) shares could be active Monday following
reports the computer maker will cut its distributors to four from around 40 to
reduce costs. Shares rose 1/8 to 23 3/4 Friday. See story.
Compaq reportedly to cut distributors
By Tom Bemis, CBS MarketWatch
Last Update: 6:50 PM ET May 8, 1999
NewsWatch
HOUSTON (CBS.MW) -- Troubled Compaq Computer will reportedly cut the
number of distributors for its computers to four from about 40 in the first
streamlining move since Eckhard Pfeiffer was forced out as CEO last month.
The move is expected to be announced next week the
Houston Chronicle said in a report that also credited
Bloomberg News.
Compaq warned it would miss analysts' estimates
just days before it reported earnings in April, sending
shares tumbling.
At the time Pfeiffer blamed industry conditions, but
subsequent industry-wide sales data suggested the
company was losing ground to competitors such as
Dell (DELL: news, msgs) and Hewlett-Packard (HWP:
news, msgs).
The streamlining will be the first effort by Chairman
and acting CEO Ben Rosen to improve performance.
Analysts welcomed the idea of cutting
distributorships as a sign Compaq is moving to
control costs. Apple Computer (AAPL: news, msgs)
followed a similar strategy at the beginning of its
turnaround effort two years ago.
Compaq stock rose 1/4 to 24 7/8 Friday.
(Houston Chronicle)
Tom Bemis is an assistant news editor for CBS MarketWatch.
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