Compaq Reports Q2 Profit of US$387 Million

BOSTON (07/25/2000) - Compaq Computer Corp. Tuesday reported second-quarter net income of US$387 million or 22 cents per diluted common share compared to a loss of $184 million a year ago.

A poll of 26 analysts by First Call/Thomson Financial had predicted Compaq would post net income of 21 cents per share. Excluding investment gains after tax of $25 million, earnings per diluted common share were 21 cents, Compaq said in a written statement.

The company's global revenue was $10.1 billion for the quarter, which ended June 30, 2000, compared to $9.4 billion a year ago.

Compaq's financial progress was led by its Industry Standard Server Group whose revenue of $1.5 billion was up 40 percent, and the return of the company's commercial PC business to profitability a quarter ahead of schedule, according to comments attributed in the statement to Compaq Chief Executive Officer and President Michael Capellas. Compaq expects double-digit growth in the second half of this fiscal year, he said.

The vendor's Enterprise Computing unit reported revenue of $3.4 billion, up 9 percent over the year-ago quarter. The unit consists of the Business Critical Servers Group, Industry Standard Servers Group and the Storage Products Group and accounted for 34 percent of the quarter's revenue. Compaq's Commercial Personal Computing Group had revenue of $3.3 billion, up 3 percent from a year ago, and recorded an operating profit of $62 million for the second quarter.

Services didn't fare as well. Global services revenue was $1.7 billion, down 4 percent from a year ago, the company said, while customer services revenue was flat at $1.1 billion and professional services revenue was $636 million, down 10 percent from a year ago. The company did not offer an explanation for why its services areas were down.

Compaq, in Houston, Texas, can be reached at +1-281-370-0670 or http://www.compaq.com/.

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