Compaq Q1 profits tumble as sales lag, channel bloats

Compaq Q1 profits tumble as sales lag, channel bloats

Compaq Computer reported first-quarter net income today of $US16 million, or one cent per diluted share, a huge dive from last year's figure of $US414 million, or 27 cents per diluted share.

The news was not surprising, however, as Compaq last month had issued a warning that first-quarter sales would fall short of expectations.

The disappointing outcome, which was in line with analysts' estimates, was a result of sagging sales and an excess of inventory in North America, the company said in a statement. Analysts polled by First Call had predicted that Compaq would report earnings of 1 cent per share. Revenues for the quarter ended March 31 were $US5.7 billion, up from $US5.3 billion for the same period in 1997.

During the second quarter, Compaq plans to reposition itself with an entirely new product line, from handheld computers to high-end servers.

In addition, Compaq said it expects its pending acquisition of Digital, which is now being reviewed by the US Federal Trade Commission and Securities and Exchange Commission, to be complete during the second quarter.

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