Compaq Sees Q3 Sales Down

Jul 25 2001

Compaq Computer Corp. on Wednesday posted sharply lower second-quarter profits and sales and said it saw revenue down a tick or mor in the current quarter as the firm aims to turn itself into services powerhouse amid economic strain and a PC price war.

The No. 2 maker of personal computers also forecast tha operating earnings per share would roughly double in the thir quarter from the current period but could lag current Wal Street's consensus target.

Second-quarter pro forma net earnings, which exclud one-time charges, fell to $67 million, or 4 cents per dilute share, from 21 cents per share in the period a year ago. Profi was also down from the previous quarter's $200 million, or 1 cents per share.

Sales fell to $8.45 billion in the quarter ended June 3 from $10.14 billion in the same quarter a year earlier and $9. billion in the fiscal first quarter.

The results confirmed preliminary figures Compaq announce two weeks ago along with new layoffs and details of its plan to focus on support services, a steadier and more profitabl business, especially in economically unsteady times.

Analysts on average had expected second-quarter operatin 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 Thomso Financial/First Call had expected earnings of 4-15 cents fo the third quarter, with a consensus of 9 cents.

Shares of Compaq were actively traded after hours bu remained roughly steady on their $14.12 close on the New Yor Stock Exchange.

The stock has fallen about 6 percent this year an underperformed, by around 70 percent, Dell Computer Corp., 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 t cut 8,500 jobs this year to shore up profits.

The company said second-quarter gross profit margin, as percentage of revenue, was 21.5 percent, down one percentag point sequentially and two points on a year-over-year basis.

"This was due to an aggressive pricing environment an decreased volume, offset by savings from improved inventor management and revenue mix," it said in a statement.

Including a $493 million restructuring charge, Compa posted a net loss of $279 million, or 17 cents per dilute share in the second quarter, compared to a profit of $38 million, or 22 cents per diluted share a year earlier, th company said.