Compaq Climbs as Results Beat Forecasts

Compaq Computer Corp. (NYSE: CPQ) was upUS$2.20 at $22.25 early Wednesday after the computer maker reported resultsthat were ahead of analyst estimates.

Analysts at UBS Warburg reportedly repeated a buy recommendation on Compaqafter the news, while Lehman Brothers and J.P. Morgan Chase reportedlyupgraded the stock to buy.

Strong sales of enterprise systems, growth in overseas markets and “solidservices profitability” offset weak demand in the North American personalcomputer market, Compaq said. Compaq, like other computer manufacturers, hasseen demand for PCs slow this year.

“While market conditions will be difficult in the first half of the year, wewill continue to differentiate ourselves by developing innovative products,” Compaq chief executive officer Michael Capellas said.

Capellas remained confident, saying that “the importance of informationtechnology continues to grow, and customer acceptance of our offerings ishigh.”

Compaq, which had previously warned analysts to expect a weak quarter because ofslowing PC sales, said revenue for the fourth quarter ended December 31strose 10 percent from a year earlier to $11.5 billion.

Income from operations rose to $515 million, or 30 cents per fully dilutedshare, 2 cents ahead of expectations. The company posted a net loss for thequarter of $672 million, or 39 cents per share, after a $1.8 billion chargerelating to the writedown of CMGI, Inc. stock. A year earlier, Compaqreported net income of $332 million, or 19 cents per share.

Capellas said management is “comfortable” with analyst estimates for 20 to25 percent growth in earnings per share.

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