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To: VICTORIA GATE, MD who wrote (71888)	10/14/1998 7:51:00 AM
From: Calvin	Respond to of 176387

Compaq Reports Third Quarter Results Digital Integration Activities On Track HOUSTON, October 14, 1998 - Compaq Computer Corporation (NYSE: CPQ) today announced worldwide sales of $8.8 billion for the third quarter ended September 30, 1998, an increase of 36 percent compared to sales reported for the third quarter of 1997. The Company reported a profit after tax of $115 million, or $.07 per share. "The third quarter was the first full quarter of operating the combined companies of Compaq and Digital," said Eckhard Pfeiffer, Compaq's President and Chief Executive Officer. "The Compaq team took decisive implementation steps during the quarter to begin realizing synergies from the Digital acquisition. To date, the Digital integration activities are on track." According to Earl Mason, Compaq's Senior Vice President and Chief Financial Officer, "Progress in integration and operational initiatives can be seen on both the income statement and balance sheet. Gross margins improved sequentially to 24.9 percent, and the acquired services business had its strongest quarter in terms of year-over-year revenue growth in over five years. On the balance sheet, cash ended at $4.4 billion after buying back approximately $180 million of Compaq's common stock and satisfying approximately $100 million of restructuring obligations. Improvements in both Days Sales Outstanding and Inventory Turns contributed to the continued strong cash position." Outlook "Sales out of the distribution channels grew 38 percent over the third quarter of 1997. We estimate this growth was more than two times the market and believe Compaq will achieve continued strong growth during the fourth quarter," said Pfeiffer. "With a significant portion of the Digital sales force integration work accomplished, we are now ready to more actively communicate with our customers on the total capability of Compaq today." "During the fourth quarter, we will continue the integration process, taking the necessary actions to achieve additional synergies," said Mason. "With strong execution of our integration plans, we continue to believe earnings for the combined companies should be accretive as early as the fourth quarter."