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Compaq to take $250m hit against next half-year's profits

Details once hidden deep in obscure SEC filing, now exposed

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Compaq is already clocking up expenses against profits for the next six months, with plans to take up to $250 million in charges. The US vendor tucked the one-time charges -- a $50-100 million sum against Q4 earnings, and an additional $100-150 million charge against Q1 charges for 2000 -- deep into the bowels of a financial report. But Big Q was unable to escape detection, and it has emerged that the charges will cover costs over its plan to stop offering Windows NT on its Alpha servers and workstations, according to Information Week. This scheme, announced earlier this year, involves customers who have bought Alpha/NT kit getting up to a 90 per cent credit towards a spanking new Intel/NT system. Alternatively, users can stay on Alpha and get a free upgrade to an Open VMS, Tru64 Unix or Linux OS. Compaq was able to keep these charges a secret when it issued its Q3 figures on 26 October by tucking them into a report to the US Securities and Exchange Commission (SEC). These documents do not have to be filed in full until 45 days after a company's financial quarter has ended. Compaq execs were no doubt hoping this cunning plan would save their skins. In April, Compaq's failure to warn analysts that profits would fall short of expectations helped speed the exit of ex-CEO and president Eckhard Pfeiffer. Compaq confirmed the charges would be taken, with a representative saying the total would depend on how many customers used the program to switch products from Alpha. ®

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