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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: PCSS who wrote (81608)	4/25/2000 3:57:00 PM
From: hlpinout	Respond to of 97611

Guess it pays sometimes to have low expectations! -- Compaq Posts 16% Rise In 1st-Quarter Net Income April 25, 2000 3:43 PM NEW YORK -(Dow Jones)- Compaq Computer Corp. reported a 16% rise in first-quarter net income in line with expectations. Compaq (CPQ) said net income came to $325 million, or 19 cents a diluted share, compared with $281 million, or 16 cents a share, in the year-earlier period. Revenue increased to $9.51 billion from $9.42 billion. The latest results included a $44 million net aftertax gain. Excluding the gain, the company said it would have posted earnings of 16 cents per share. The mean estimate of 29 analysts surveyed by First Call/Thomson Financial was for earnings of 16 cents a share. Analysts said they weren't expecting the leading maker of personal computers to post a blow out March quarter because of an industrywide softness in PC sales to corporations. Those sales have been slow to take off this year after last year's lockdown in spending in the face of the year 2000 computer glitch. Sluggish sales have depressed results for PC makers across the board into the first quarter and Compaq wasn't expected to be exception. Although PC demand picked up near the end of the March quarter, rivals Gateway Inc. and International Business Machines Corp. last week blamed continued softness in the corporate PC market for slower-than-expected revenue growth. Analysts said they were looking for the Houston-based company to prove that it is working out its problems -- improving gross margins, cutting costs and expanding sales. "It's the directions coming out of (the first quarter) that matter more than the bottom line," Robert Cihra, an analyst with ING Barings LLC, told Dow Jones Newswires. "This is a turnaround year (for Compaq), and this is quarter one of a four-quarter turnaround." Compaq consistently has been losing market share to cross-state rival Dell Computer Corp., which now sells more PCs to U.S. customers than Compaq does. Compaq has struggled to compete with Dell's streamlined direct-sale approach but has vowed to sell 40% of its computers through direct channels by the fourth quarter instead of through its network of third-party distributors. When it outlined plans in January to turn around its flagging corporate business, Compaq was selling only about 9% of its PCs directly to business customers. The unit lost $448 billion on sales of $12.2 billion last year and won't be profitable until at least the September quarter. Compaq's woes culminated last April with the ousting of chief executive officer Eckhard Pfeiffer and chief financial officer Earl Mason. Michael D. Capellas took the company's helm in July as president and CEO, but it took the company 10 months to hire a new CFO. In February, former Eastman Kodak executive Jesse J. Greene Jr. came on board and was charged with helping Compaq clean up its tarnished image on Wall Street. (Compiled from Dow Jones Newswires and other sources) Copyright (c) 2000 Dow Jones & Company, Inc. All Rights Reserved.