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

To: PCSS who wrote (92136)	7/11/2001 3:34:44 PM
From: Elwood P. Dowd	Respond to of 97611

7/11/2001 2:44:00 PM HOUSTON, Jul 11, 2001 (AP WorldStream via COMTEX) -- Compaq Computer Corp. hoped natural attrition would allow it to shave 2,500 jobs - in addition to 4,500 layoffs - when it announced it was restructuring earlier this year. But a sour economy, particularly in the tech sector, meant Compaq workers had no place to go. So the Houston-based computer maker said Tuesday it will terminate 4,000 more workers instead. "Given the weak worldwide economy, our attrition has been lower than expected, so we have accelerated the process by including these positions in the latest charge," Compaq chief financial officer Jeff Clarke said. Compaq will take a restructuring charge of about dlrs 490 million in the second quarter, which it said was mostly related to job cuts. The company is expected to save dlrs 900 million annually from the total reduction of 8,500 jobs, approximately 12 percent of the work force in early 2001. So far, Compaq has laid off 3,500 workers from the initial round of cuts. Clarke said the remaining 1,000 terminations from the first wave mostly will come in Houston and Erskine, Scotland. Along with the job cuts, Compaq announced it will meet Wall Street's second-quarter expected earnings of 4 cents per share but will bring in only dlrs 8.4 billion in revenue, short of a projected dlrs 9 billion and a 17 percent plunge from dlrs 10.13 billion in the year-ago quarter. Shares of Compaq were up 33 cents to dlrs 14.09 in midday trading on the New York Stock Exchange. The computer maker blamed worsening economic conditions and intensifying price wars in Europe, particularly in the United Kingdom, Germany and Switzerland. Lehman Brothers analyst Daniel Niles said Compaq's news, following warnings from chip maker Advanced Micro Devices Inc. and storage giant EMC, is troubling. "You hear from EMC, AMD and now Compaq, and it starts to call into question a second-half (economic) recovery," Niles said. Niles said Compaq's announcement boded much worse for the overall economy, and tech companies in particular, than for the company itself. "In some senses Compaq's results aren't so bad, and the bottom line is coming in pretty much where it was guided to," Niles said. "(Chairman and chief executive officer) Michael Capellas is doing a pretty good job of managing a company in one of the most horrific environments." Like the previous cuts, Clarke said the additional terminations are expected in Compaq's personal computer business, supply chain operations and administration. Clarke added that Compaq is keeping up with competitors' cutthroat pricing of products, which began domestically but has spread abroad. A.G. Edwards & Sons Inc. analyst Brett Miller said there is no price war, but Dell Computer Corp. hurts Compaq because it can translate lower costs into lower prices faster. "I think overall it sounds like the market is bad, it's tough, but pricing wasn't any different (last quarter) aggressiveness-wise." Compaq is scheduled to reveal complete second-quarter results after the market closes July 25.