Compaq Computer Corp. on Wednesday posted sharply lower second-quarter profits and sales and said it saw revenue down a tick or more
in the current quarter as the firm aims to turn itself into a
services powerhouse amid economic strain and a PC price war.
The No. 2 maker of personal computers also forecast that
operating earnings per share would roughly double in the third
quarter from the current period but could lag current Wall
Street's consensus target.
Second-quarter pro forma net earnings, which exclude
one-time charges, fell to $67 million, or 4 cents per diluted
share, from 21 cents per share in the period a year ago. Profit
was also down from the previous quarter's $200 million, or 12
cents per share.
Sales fell to $8.45 billion in the quarter ended June 30
from $10.14 billion in the same quarter a year earlier and $9.2
billion in the fiscal first quarter.
The results confirmed preliminary figures Compaq announced
two weeks ago along with new layoffs and details of its plans
to focus on support services, a steadier and more profitable
business, especially in economically unsteady times.
Analysts on average had expected second-quarter operating
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 Thomson
Financial/First Call had expected earnings of 4-15 cents for
the third quarter, with a consensus of 9 cents.
Shares of Compaq were actively traded after hours but
remained roughly steady on their $14.12 close on the New York
Stock Exchange.
The stock has fallen about 6 percent this year and
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 to
cut 8,500 jobs this year to shore up profits.
The company said second-quarter gross profit margin, as a
percentage of revenue, was 21.5 percent, down one percentage
point sequentially and two points on a year-over-year basis.
"This was due to an aggressive pricing environment and
decreased volume, offset by savings from improved inventory
management and revenue mix," it said in a statement.
Including a $493 million restructuring charge, Compaq
posted a net loss of $279 million, or 17 cents per diluted
share in the second quarter, compared to a profit of $388
million, or 22 cents per diluted share a year earlier, the
company said.
