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To: Tom Simpson who wrote (3499)	6/4/1998 11:55:00 AM
From: Mark Oliver	Read Replies (1) \| Respond to of 9256

Compaq "On Track" To Correct Inventory Problems Inter@ctive Week June 3, 1998 By Kimberly Weisul 4:30 PM EDT A Compaq Computer Corp. official said Wednesday that the company was on track to resolve its inventory problems and cut backlog to four weeks by the end of the month. Speaking at the PaineWebber Technology and Growth conference in New York, Earl Mason, Compaq's chief financial officer, said the company was on track to resolve inventory issues. In afternoon trading, Compaq shares were up 13/16 to 28 1/4. Mason also promised Compaq would be "very competitive in the direct space," and pointed out that consumers can already buy some products from the Compaq Web site. Although Mason did not provide details on Compaq's direct marketing strategy, he said it was important that Compaq's own sales force focus on high end accounts, leaving individual personal computer sales to Compaq's channel partners. An inventory glut sent Compaq shares into a tailspin in March. When the company released first quarter earnings of a penny a share in April, officials said the second quarter would also be "about break even" because of inventory corrections. Wall Street is expecting earnings of 2 cents a share for the second quarter. While Compaq has struggled, Dell Computer Corp. has thrived with its direct model prompting competitors to emulate Dell. Mason also said he expects that the Federal Trade Commission will approve its pending merger with Digital Equipment Corp. as early as today or tomorrow. He said FTC lawyers were unanimous in recommending approval of the merger. Mason said Compaq would be the first to offer 64-bit NT processors with Digital's Alpha chip. Mason said Compaq would outline its "NT leapfrog strategy" to analysts next week. With resources from the Digital acquisition, "We can offer 64-bit to Microsoft ahead of Merced," he said. In response to an audience question, Mason addressed his company's relationship with Lexmark International Inc. Lexmark provides printers to Compaq that are sold under the Compaq brand name. Mason said that for this year, Lexmark should be able to keep up with demand, but "I worry about next year." He said Compaq was talking to "Lexmark and other people" to ensure that Compaq would be able to meet demand for its printers. With the Digital acquisition, Compaq also assumes control of search engine Alta Vista. Mason hinted that the search engine would soon incorporate new features, saying Compaq was "working with some of the software providers" to enhance the service.