Compaq sustained last quarter's return to profitability, beating analyst expectations and posting $US44 million in net income for the quarter to March 31, despite across-the-board revenue declines.
Compaq's revenue dropped 16 per cent year-over-year to $US7.7 billion. Earnings per share were $0.03, beating the $0.01 consensus estimate of analysts polled by Thomson Financial/First Call.
This is likely to be Compaq's last quarterly report, chairman and CEO Michael Capellas noted in a post-release conference call with press and analysts. Capellas said he is confident the legal issues surrounding Compaq's planned acquisition by Hewlett-Packard will be resolved in the companies' favour, and that their merger will close within the next few weeks.
Trial begins next week on a lawsuit brought by HP board member and merger opponent Walter Hewlett, who is seeking to block the merger because of alleged coercion of major shareholders.
Because of the planned acquisition, Compaq did not provide guidance on future quarterly results. Analyst turnout for the conference call was unusually light; only two posed questions during Compaq's question-and-answer session with executives.
Compaq's Access unit, which includes consumer and commercial PCs, continued dragging on the company's bottom line during the quarter. The unit showed an 18 per cent year-over-year revenue decline to $US3.5 billion and posted a $36 million loss for the quarter. Commercial PC revenue jumped slightly over the fourth quarter of 2001, Compaq noted.
Handhelds were one bright spot in the gloomy hardware market. Unit sales of the iPAQ Pocket PC grew 14 per cent year-over-year, while iPAQ revenue grew 18 per cent. Compaq will ship its 2 millionth iPAQ this month, Capellas said.
Compaq Global Services was the company's most profitable segment, posting an operating profit of $229 million on revenue of $1.9 billion, down 3 per cent from last year's first quarter.
Revenue from Compaq's Enterprise Computing division, which includes its high-end storage and server products, dropped 20 per cent year-over-year to $2.4 billion, with an operating profit of $18 million. While revenue dropped, unit sales of industry standard servers grew 3 per cent year-over-year, and Compaq expects further market share gains in North America, Capellas said.
In advance of the financial report, shares of Compaq ended up 1.3 per cent, at $10.82, in trading on the New York Stock Exchange.