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

To: Elwood P. Dowd who wrote (90938)	4/26/2001 3:56:41 PM
From: tonyt	Respond to of 97611

Times tough, but better days ahead - Compaq ceo 4/26/2001 3:53:00 PM By Jeff Franks HOUSTON, April 26 (Reuters) - Times are tough for the computer industry, but sales should improve along with the rest of the economy later in the year, Compaq Computer Corp. (CPQ) chairman and chief executive Michael Capellas said on Thursday. He assured a sometimes grumpy shareholders meeting that even though Compaq recently lost its position as the world's largest personal computer maker to Texas rival Dell Computer Corp., the company would emerge as a "winner" once the downturn ends. Quoting Charles Dickens, Capellas said "it was the best times and it was the worst of times" for the computer industry. Innovation goes on and products are constantly improving, he said, but "we are caught in a very tough market." Compaq said this week its first quarter operating profit was down from last year, 7,000 jobs would be cut and that earnings would be well below expectations in the current quarter. "I think the continued weakness in the U.S. market is ahead of us for a while ... I do expect to see the market start to improve late in the second half (of this year)," Capellas told shareholders. He told reporters later that his prediction was based on an "intuitive feeling" bolstered by the belief that U.S. companies were managing inventory well and that recent interest rate cuts by the Federal Reserve would eventually take hold. Last week, first quarter figures compiled by market researchers Gartner Dataquest and International Data Corp showed that Dell for the first time sold more PCs than Compaq, long the industry's top seller. Capellas said Compaq would not be obsessed about getting the title back because it does not necessarily translate into profits. "We don't want to chase just pure commodity PC sales," he said. "To say I want to chase number one in the PC market just to be number one, no, we're not going to do that." Instead, he said: "We'll be very, very aggressive in (pursuing) major commercial accounts. We'll be very, very aggressive in evolving new markets around wireless and internet access devices of all kinds." Some shareholders complained the company was not doing enough to boost a share price which has languished around $17 in recent days, but Capellas said Compaq will be well-positioned when the economy rebounds. He said an increase in direct sales to consumers -- now 43 percent of all sales in the U.S. -- and an abundance of available parts were making it possible for Compaq to permanently reduce inventory and cut costs. Also, he said, the company has had success with storage and server products, as well as its popular iPAQ handheld computer. "When the market turns -- and it will turn...some companies will emerge as winners and some will not," he said. "We will definitely be one of those winners." REUTERS Rtr 15:53 04-26-01 Selector Code: reuco Copyright 2001, Reuters News Service