Users calm about Compaq earnings warning

Ten users and partners polled at random during the first day of Compaq's Innovate Forum '99 here said that they aren't too worried by the company's announcement that its first quarter earnings will fall below expectations.

In its announcement on Friday, Compaq officials said it expects to post revenues of $US9.4 billion. That would result in earnings of 15 cents per share, less than half of the 31 cents per share forecast by analysts polled by First Call. The company's share price took a plunge of about $7 per share on Monday as a result of the earnings warning.

"I don't have a long-term concern" about Compaq's financials, said Tim Moyle, a Compaq server product manager at Computacenter, a Compaq reseller in London.

Moyle praised Compaq president and chief executive officer Eckhard Pfeiffer for addressing the earnings situation right at the start of his keynote speech on Tuesday, thus clearing the air.

"He confronted the share-price issue head-on and got it out of the way," Moyle said.

Clive Chin, head deputy director of the IS (information systems) service at the office of the United Nations High Commissioner for Refugees in Geneva, also expressed confidence Compaq will recover from the setback.

"Compaq is a solid company. I'm not concerned," Chin said.

"Compaq has got good management. They will weather it," said John Castiglioni, technical director at Pacific Bell in San Ramon, California.

Users' concerns about Compaq lie elsewhere.

Castiglioni is more interested in determining Compaq's commitment at the research and development level to the products it acquired when it bought Tandem Computers. It would be very bad news for his company (Pacific Bell) if Compaq turned its back on the Tandem servers, he said.

"It would be very costly for us to migrate from that platform," said Castiglioni, whose company uses Tandem servers, as well as Compaq PCs and ProLiant servers.

A similar concern was expressed by Giovanni Palma, IS manager at Colombian telecommunications company Avantel SA in Bogotá.

"We use Tandem servers and we're concerned that they might be phased out," Palma said.

He's also worried that Compaq might continue developing the Tandem servers but that the company might redesign them and along the way strip the servers of their unique features and functionality.

"It's important that Compaq maintains the level of specialisation of the Tandem architecture," Palma added.

The users interviewed also shared an interest in electronic commerce. They gave high marks to Pfeiffer for Compaq's new electronic commerce strategy, which he announced during his speech on Tuesday.

"Electronic commerce is what's driving the IT industry," said the UN's Chin, who called Compaq's focus on this area "very appropriate".

Another user said he was happy that Compaq is taking a strong stand regarding Internet commerce.

"[Pfeiffer] made a very clear mission statement. It's good to see," said Jimmy Chi Wong, office platforms manager at the corporate infrastructure division of Nokia in Irving, Texas.

"Compaq is heading in the right direction," said an IS professional at a large global publishing company based in Europe, who didn't want to be named. "They're jumping in with both feet and trying to move as quickly as possible."

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