Compaq reports $92 million in earnings

By Mark Babineck The Associated Press
Thursday January 17, 2002

HOUSTON — Compaq Computer Corp. easily topped Wall Street’s fourth-quarter 2001 earnings expectations, announcing Wednesday that it earned $92 million for the period. 

The Houston-based computer maker, which informed investors last week it likely would make money, turned a profit of 5 cents per share, beating the 1-cent consensus of analysts surveyed by Thomson Financial/First Call. 

The earnings figure includes a charge of $36 million, or 1 cent per share, related to Compaq’s pending merger with Palo Alto, Calif.-based Hewlett-Packard Co. 

Compaq’s earnings were down 82 percent from the $515 million, or 30 cents a share, it made in the final quarter of 2000, not including a $1.8 million writedown because of devaluation of its large stake in CMGI Inc. 

Chairman and chief executive Michael Capellas also predicted Compaq would bring in about $7.6 billion in revenue and earn a penny a share in the current quarter.  

Analysts anticipated a break-even period. 

“While we did see some strengthening of the (information technology) market in the fourth quarter, first half growth will be moderate and pent-up demand should drive a stronger recovery in the second half of the year,” Capellas said. 

The company, which entered the year struggling with slow computer sales, shed 8,500 jobs in a massive restructuring. On the year, the company lost $563 million, compared to a $595 million profit in 2000. 

Revenues for the October-December quarter of 2001 totaled $8.46 billion, down 26 percent from the $11.48 billion in sales it posted in the last three months of 2000. 

Full-year revenues totaled $33.55 billion, down 21 percent from the $42.22 billion that came in during 2000. 

The proposed $24 billion merger of Compaq and Hewlett-Packard faces opposition by the Hewlett and Packard families and a Packard foundation that control a combined 18 percent of HP shares. 

HP announced plans to buy Compaq on Sept. 3. The companies said they believe merging will make them a leader in key technology segments, improve their offerings for corporate customers and speed their pace of innovation. HP and Compaq are awaiting regulatory approval before setting a date for a shareholder vote. 

Compaq shares were down 30 cents to $11.10 on the New York Stock Exchange. The company’s results were released after the close of trading. 


On the Net: http://www.compaq.com