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

To: Richie who wrote (24369)	4/15/1998 8:40:00 AM
From: fred woodall	Read Replies (2) \| Respond to of 97611

DJ WIRE:Compaq Computer Corp. Wednesday made official an earlier profit warning by reporting a 96% plunge in first-quarter net income. Sales, however, appeared to be a bit higher than the company's meager expectations. The world's largest maker of PCs also indicated it expects the second quarter to be a "period of adjustment" as it repositions itself with an almost completely new product line. Compaq (CPQ) said earnings in the latest first quarter totaled $16 million, or a penny a diluted share, compared with year-ago earnings of $414 million, or 27 cents a diluted share. Sales edged up 8% to $5.69 billion. In early March, Houston-based Compaq stunned the business world by saying that because of pricing pressure, it expected to break even in the first quarter rather than post a profit estimated to exceed $500 million. At the time it said its sales would remain flat compared with the year-ago period. Thirty analysts surveyed by First Call were looking for Compaq to post earnings of a penny a share in the latest first quarter. In March, Compaq said sales from its North American commercial channels weren't meeting its expectations. It said it cut prices as a result and chose to aggressively promote commercial products in North America in order to reduce inventories. Compaq said its inventories fell by $314 million in the period compared with the fourth quarter of 1997. The company increased its cash balance to $7.10 billion, a jump of 43% from the $5.00 billion reported a year ago. Compaq's difficulties are its worst since the third quarter of 1991 when it posted its first-ever loss because of rivals' lower pricing. According to The Wall Street Journal, Compaq has been hurt this time by its own mistakes, including its reliance on servers as the top source of profits and its continuing struggle to change its production and distribution methods. The company said it expects its problems to continue into the second quarter before things start to improve. It said that period will be one of adjustment as it repositions itself with an almost completely new product line. Thirty analysts surveyed by First Call are looking for Compaq to post second-quarter net income of about nine cents a diluted share. The period ends about June 30. In the year-ago second quarter, the company reported net of $214 million, or 75 cents a primary and diluted share, on sales of $5.01 billion. The bottom line included a charge of $208 million, or 73 cents a share. Excluding the charge, net income would have been $422 million, or $1.48 a share. Year-ago figures don't reflect a two-for-one stock split, which took effect Jan. 20, 1998. Meanwhile, Compaq said it continues to work with the Federal Trade Commission and the Securities and Exchange Commission to obtain approval for the pending acquisition of Digital Equipment Corp. (DEC). Closing is expected in the second quarter.