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

To: Captain Jack who wrote (92335)	7/25/2001 8:35:58 PM
From: Elwood P. Dowd	Read Replies (2) \| Respond to of 97611

Wednesday July 25 6:15 PM ET Weak Economy Hurts Compaq; Sales Down SAN FRANCISCO (Reuters) - Compaq Computer Corp. (NYSE:CPQ - news) on Wednesday posted sharply lower second-quarter profits and sales, and said sales could continue to slide in the coming months as a downturn in the computer sector spreads around the world. ``It's an understatement to say that we're in the midst of an extremely challenging global market,'' Michael Capellas, chairman and chief executive officer, said in a conference call. The No. 2 maker of personal computers also forecast that operating earnings per share would roughly double in the third quarter from the current period, but could lag current Wall Street's consensus target. Second-quarter pro forma net earnings, which exclude one-time charges, fell to $67 million, or 4 cents per diluted share, from 21 cents per share in the period a year ago. Profit was also down from the previous quarter's $200 million, or 12 cents per share. Sales fell to $8.45 billion in the quarter ended June 30 from $10.14 billion in the same quarter a year earlier. ``To me the thing that jumps out is that their guided EPS looks pretty good,'' said Wit SoundView analyst Mark Specker. ''That suggests some of the work they've been doing on expense control, from reducing employees, reducing inventory, getting turns up, all those kinds of things are starting to pay a little bit of dividend.'' However, Specker said a global slowdown was somewhat daunting. ``Europe and Asia Pacific were the engines of what growth and stability there was,'' he said. ``To see them slowdown is a bit frightening.'' Shares of Compaq were actively traded after hours but traded roughly steady on their $14.12 close on the New York Stock Exchange (news - web sites). They did slip briefly after hours to $13.98 before making up the lost ground. ``The permanent improvements we are making in our business model are having a positive impact now,'' Capellas said in a statement. The results confirmed preliminary figures Compaq announced two weeks ago along with new layoffs and details of its plans to focus on support services, a steadier and more profitable business, especially in economically unsteady times. Analysts on average had expected second-quarter operating earnings of 17 cents per share earlier in the year. Third-quarter sales would be $8.0 billion to $8.4 billion, bringing earnings per share of 7-9 cents, Compaq forecast. Wall Street analysts polled by research firm Thomson Financial/First Call had expected earnings of 4-15 cents for the third quarter, with a consensus of 9 cents. The stock has fallen about 6 percent this year and underperformed, by around 70 percent, Dell Computer Corp. (NasdaqNM:DELL - news), which took the global lead in PC sales from Compaq earlier this year. Compaq had announced preliminary results on July 10, blaming weakness in Europe and a PC price war and promising to cut 8,500 jobs this year to shore up profits. Compaq said second-quarter gross profit margin, as a percentage of revenue, was 21.5 percent, down one percentage point sequentially and two points on a year-over-year basis. ``This was due to an aggressive pricing environment and decreased volume, offset by savings from improved inventory management and revenue mix,'' it said in a statement. Including a $493 million restructuring charge, Compaq posted a net loss of $279 million, or 17 cents per diluted share in the second quarter, compared to a profit of $388 million, or 22 cents per diluted share a year earlier, the company said. Compaq said its services division -- which the company sees as its future -- was gaining ground, with revenue up 7 percent year on year in the quarter, representing nearly a quarter of the company's sales, even as enterprise computing hardware revenue dropped 21 percent. ``They appear to be planning for some narrowing of the cost gap. The services business does seem to be the bright spot,'' said Vadim Zlotnikov, an analyst at Bernstein. But, he said, ``This will be the first year in close to 40 years you'll see a decline year over year in capital spending or sales of technology,'' referring to the dawn of the computer age.

To: Captain Jack who wrote (92335)	7/26/2001 9:07:02 AM
From: MeDroogies	Respond to of 97611

The question of the "short club" is undoubtedly true in the media. It's all hype, or all doom and gloom for journalists. I, once again, point out the general poor IQ of the mainstream journalist. Did anyone catch yesterday's NYT article on LU? Knowing quite a bit about what goes on there (through a neighbor who works in the acct. dept.), I was shocked at the general description of the demise. As bad as it is, the NYT painted it beyond black. Pointing out that LU has gone from 155,000 employees to potentially 60k with the next round of cuts. However, at the end of the article is a chart of all the job "cuts". Well over 1/2 of the "cuts" from 155k to 60k were done via sales of plants and IPO spinoffs. In fact, while the job cuts were substantial (without a doubt), they WEREN'T on the order of 95k, as the article implies in the first few paragraphs. Unfortunately, our wise press forgets that the average reader only gets 5 paragraphs into any article. So....the spectacular figures go up front in order to "hook" them.