Compaq posts third-quarter loss
Published: 24 Oct 2001 12:11 BST
After market close Tuesday, the computer maker reported a third-quarter loss of $499m, or 29 cents per share. Excluding investment losses mostly related to an investment in CMGI, Compaq lost $120m, or 7 cents per share.
"There's no question that pricing got particularly heavy during the quarter," Compaq chief executive Michael Capellas said during a conference call with analysts. "Despite our cost discipline, we were unable to offset pricing and volume trends."
Compaq's report came as little surprise. The company previously warned of a third-quarter operating loss of 5 cents to 7 cents per share on revenue of $7.4bn to $7.5bn.
Analysts surveyed by earnings tracking firm First Call produced a consensus forecast calling for a loss of 6 cents per share for Compaq's third quarter. Before Compaq's warning, First Call consensus had predicted a third-quarter profit of 5 cents per share.
Company executives expect little improvement in the near term. Compaq predicts it will lose 3 cents per share on fourth-quarter revenue of $7.6bn to $7.8bn.
"We do not anticipate dramatic changes in corporate IT spending, particularly through the first half of 2002," Capellas said.
At the time of Compaq's warning at the end of September, Capellas blamed the loss on a confluence of events: a typhoon in Taiwan; last month's terrorist attacks in New York and Washington D.C.; slower sales in the wake of the announcement of a Hewlett-Packard and Compaq merger; and a generally weak economy.
The company continued to face a fierce price war from rivals such as Dell Computer. Compaq's gross margins fell to 19.9 percent, down 1.6 percent from the second quarter and 4.1 points from the same period a year ago.
Third-quarter revenue increased 2 percent year over year to $1.9bn for Compaq's Global Services division. Profit for the unit increased 15 percent to $284m.
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