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Compaq stagnates in Q1

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Compaq CEO Michael Capellas forecasts zero growth for the company in Q1, and overall growth for the first half of 2001 of 5 per cent - half of the 10 per cent achieved in the same period last year.

Capellas made the predictions in an interview with Der Spiegel, the leading German news magazine. Certainly, they are not out of line with consensus analyst forecasts of 6-8 per cent for the full year.

Last week, Capellas told Sunday Business, a UK newspaper that he was comfortable with analyst forecasts, while hinting strongly that he anticipated growth at the upper end of the range.

In the Der Spiegel interview, as reported by Reuters, Capellas said the 'classic' PC industry was 'gradually becoming the "Old Economy" of the information technology sector. "Our task in the future will not be to put cumbersome boxes on people's tables," he said. (Doesn't it have resellers, disties and retailers to do this?)

At some point in the next few months, analysts expect Dell to overtake Compaq as the world's biggest PC maker. Compaq disputes this - it counts iPaqs as PCs. But judging from Capellas' comments, it looks like the company will cheerfully cede top dog status in PC box shifting.

Compaq always has huge margin-fat business in storage systems, servers and services to fall back onThis will play well with Wall Street. But what about Compaq's corporate heartland - the companies that buy Compaq for the same comfort blanket reason they used to buy IBM?

De-emphasise low-margin PCs too much, and Compaq risks throwing out the baby with the bathwater. ®

Related stories

Reuters: Compaq sees sales slowdown
Dell plans big layoffs - Client Server News
Capellas puts the fun back into Compaq
European PC market hit by soft Euro
Compaq suffering iPAQ
Compaq hits reduced Q4 targets

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