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

To: PCSS who wrote (87791)	12/12/2000 6:57:45 PM
From: hlpinout	Respond to of 97611

Compaq 4th-Qtr, 2001 Sales and Profit to Fall Short (Update1) 12/12/00 3:12:00 PM Source: Bloomberg News (Adds investor, company comments; details, background beginning in fourth paragraph.) Houston, Dec. 12 (Bloomberg) -- Compaq Computer Corp., the world's biggest maker of personal computers, said sales and profit will miss its forecasts in the fourth quarter and 2001 because of weak PC sales to consumers and small businesses. Fourth-quarter sales will be $11.2 billion to $11.4 billion, missing targets by 8 percent to 10 percent, Chief Executive Michael Capellas said on a conference call. Profit before charges will be 28 cents to 30 cents a share, less than the 36-cent average estimate of analysts polled by First Call/Thomson Financial. Compaq is the latest PC-related company to cut expectations. Evidence of sluggish sales already had piled up with warnings from No. 1 chipmaker Intel Corp., Apple Computer Inc., Gateway Inc. and others. The price of memory chips, another indicator of PC demand, has fallen by half in the past three months. ''It's kind of like everyone is going to confession with these warnings,'' said Louis Kokernak, senior equity strategist at Martin Capital Advisors, which owns Compaq shares. Compaq shares rose 53 cents to $20.77 in regular trading. They slipped as low as $19.50 after the announcement. The Houston-based company's stock has fallen 23 percent this year. The company expects sales next year to rise about 10 percent, although the second half of the year will be stronger than the first, Capellas said. Earnings per share will increase 25 percent, he said. After reporting third-quarter profit that more than quadrupled, in October Capellas predicted fourth-quarter sales would climb 18 percent to about $12.4 billion and earnings would rise more than 40 percent next year. Capellas's First Stumble Today's announcement is the first stumble for Capellas, who was picked to succeed Eckhard Pfeiffer as Compaq's chief executive in July 1999. Pfeiffer was ousted by Compaq's board after several quarters of lackluster sales and earnings. Under Capellas, who was named chairman in September, Compaq has focused on more profitable products, such as servers that power networks and Web sites, as well as devices that link to the Internet, and has lured corporate customers away from rivals such as Dell Computer Corp. David Katz, chief investment officer for Matrix Asset Advisors, which owns 348,000 Compaq shares, said today's announcement doesn't hurt Capellas's effort. ''Compaq has absolutely turned around,'' he said. ''You would have liked them to be the salmon swimming upstream, but in this environment, that's just not going to happen.'' December Slowdown Problems developed in early December, Capellas said, as a slowdown in the consumer market spread to small-business customers and Internet companies. December typically accounts for about 45 percent of Compaq's fourth-quarter sales. ''October looked good,'' he said today. ''Through November, we were still on track.'' Sales to larger corporate customers remain strong, Capellas said. Compaq will report a $1 billion non-cash charge in the fourth quarter related to its investment in CMGI Inc., and a $75 million charge related to Compaq's purchase of custom-PC manufacturing assets from Inacom Inc. in January, Capellas said.

To: PCSS who wrote (87791)	12/12/2000 7:14:52 PM
From: Elwood P. Dowd	Read Replies (2) \| Respond to of 97611

Michael: One thing is reasonably certain, that CPQ didn't give WS a number today that they(CPQ)couldn't achieve. I actually know some people who said that they won't spend any money(on bigger ticket stuff) til the election is resolved, so maybe if we get that out of the way there will be more confidence and consumer spending will accelerate. If Greenspan changes the bias to neutral on the 19th that will help. Betcha CPQ beats the newly established numbers when they report on 1/23. El