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

To: beachbum who wrote (90952)	4/27/2001 8:29:01 AM
From: Elwood P. Dowd	Read Replies (1) \| Respond to of 97611

Compaq's 19th annual shareholders meeting by: yucatanbob 04/27/01 08:02 am EDT Msg: 232488 of 232488 While no mention was made of the pending merger announcement, Capellas stressed the success of the company's services division in the past quarter, which accounted for 21 percent of all revenue and was the only business group to see growth. Compaq's Global Services Division is split into two operations, customer service and consulting services. While customer service mainly fields repair questions through call centers, the consulting services group works with medium and large companies to design and build networks, Web sites and applications. The consulting group is strongest in Europe but has about 5,000 employees in the United States. Peter Blackmore, executive vice president of worldwide sales and services at Compaq, said the addition of Proxicom's staff should help U.S. operations noticeably. He said Proxicom has a strong presence in retail, automotive, media and entertainment, while the two companies share customers in telecommunications and financial services, Blackmore said. The Proxicom name is being kept because of the reputation the company has nationally and internationally for being creative and nimble, said Jeff Lynn, vice president and general manager of Compaq Global Services. The market reality is that Compaq Global Services is "far more creative and nimble than our brand gives us credit for," Lynn said. "This is sort of a wake-up call to say, `Hey, we're doing a lot of things you've just never noticed before.' " Ever since the Internet business bubble began to deflate in April of 2000, Proxicom and many other high-tech consulting firms have found themselves in hot water. A heavy reliance on dot-com clients, many of which have gone out of business, robbed many consultants of their meal tickets, while the ongoing economic slowdown has led most other companies to slow their information technology spending. Proxicom was weathering the storm fairly well but last month warned it would lose 12 to 13 cents per share rather than make a 2-cent per share profit, as previously expected. The company cut 227 jobs, or 19 percent of its work force. Dan Niles, an analyst with Lehman Brothers, said the Proxicom acquisition isn't particularly significant, given that it will add just about $200 million in annual revenue compared with the $9 billion Compaq's services division took in last year, but it's still a step in the right direction. "It's a good time to go shopping," Niles said. "The markets have got a white sale going on, and unfortunately it may continue for some time." Compaq will be looking into other similar acquisitions, Blackmore said, particularly if they bring the company into geographic areas or industries where it currently is underrepresented. Compaq shareholders were less concerned with the good news from the service side of the business than they were with the bad news that has greeted them in their stock portfolios this year. The stock has been trading below $30 for nearly six months and has come very close to five-year lows several times. Carol Townsend, a longtime Compaq shareholder, said she felt the level of frustration among investors Thursday was almost equal to that felt two years ago shortly after the resignation of former CEO Eckhard Pfeiffer. "There's frustration over the fact that executive compensation does not reflect declining shareholder value," Townsend said. There were a number of angry questions about the company's stock performance, but Townsend said she was surprised there weren't more. A proposal to require the company to name at least two candidates for each open position on the board of directors, which was opposed by the company, did not pass in a vote of shareholders. Most investors said they recognized that Compaq's woes were shared by many others in the computer industry, but they were still concerned