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To: Patrick E.McDaniel who wrote (145831)	10/26/1999 6:52:00 PM
From: Calvin	Respond to of 176387

Pat, the second-last paragraph is quite interesting wouldn't you say? --------------------------------------------------------------------------------- Compaq posts upside earnings surprise By Janet Haney, CBS MarketWatch Last Update: 6:17 PM ET Oct 26, 1999 Silicon Stocks Hardware Report HOUSTON (CBS.MW) -- Compaq Computer reported a higher than expected profit Tuesday on strong sales growth including a 22 percent jump in consumer group sales to customers. The PC maker said its net income, excluding charges, totaled $117 million, or 7 cents a share. In the year-earlier quarter, Compaq (CPQ: news, msgs) earned $115 million, also 7 cents per share. The company was expected to report a profit of a nickel per share in this year's September quarter, according to analysts surveyed by First Call. Sales for the third quarter hit $9.2 billion, vs. revenue of $8.8 billion in the year-ago period. Compaq shares rose 1 1/16 to 20 ahead of the earnings release. The stock has plunged about 63 percent from a 52-week high of 51 1/4 in January. The company said it took a charge of $868 million in the third quarter as well as a one-time gain of $1.2 billion resulting from its sale of its interest in the Internet search engine AltaVista. In its second-quarter release, Compaq said it would cut 6,000 to 8,000 jobs and close some facilities. It said it expected a charge of $700 million to $900 million in the third quarter for those moves. Compaq said its consumer group sales rose 22 percent sequentially to $1.5 billion, and they were up 15 percent from the third quarter of 1998. Its product revenue increased by 14 percent from the year-ago quarter to $3.3 billion but was flat sequentially. Compaq said its commercial personal computing group revenue fell 12 percent from the year-ago period and 16 percent sequentially. Sales reached $2.7 billion in the third quarter. The company cited reductions in its channel inventory, pricing pressure and the impact from Sept. 21 Taiwan earthquake as reasons for the fall in the commercial PC business. Additionally, Compaq's commercial PC segment reported a third-quarter loss of $169 million vs. a profit of $116 million the year-earlier quarter. "Customer response to the PC products we launched during the quarter was tremendous and we continue to be the number one PC supplier in the world," said, Michael Capellas, president and CEO, in a statement. "Nonetheless, we have not kept pace with shifts in the PC sales and distribution model. We are moving aggressively to new business models which will lead the next generation of PC innovation and Internet access."