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Compaq gets clobbered

Q2 profits down 81%

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Compaq has reported a Q2 profit fall of 81 per cent - $67 million down from $362 million a year earlier.

Sales slumped by 17 per cent in the period to $8.45 billion.

Compaq's PC division suffered which is unsurprising. Sales fell to $3.82 billion from $4.91 billion, but as analysts Dataquest revealed last week, Compaq's unit shipments declined by 14 per cent to 3.4 million in the period.

This is all at a time when worldwide PC shipments declined for the first time in 15 years. They dropped 1.9 per cent in Q2 - around 30.4 million units were shipped - and Dell was the only top tier PC vendor to see growth worldwide and in the US during the three-month period. It shipped four million units worldwide, a growth of 20 per cent over Q2 2000.

Compaq is getting roundly spanked in a fierce price war during a market slowdown.

The company has now said it will miss its Q3 sales targets. It's now forecasting revenues of $8 billion to $8.4 billion. In last year's third quarter, the company had net income of $550 million, or 31 cents a share, on sales of $11.2 billion

Earlier in the month Compaq said it was to axe another 4,000 staff. The worldwide layoffs will take effect by the end of this year, and bring Compaq's proposed job cut total for the year to 8,500, or around 12 per cent of its workforce.

In a conference call Chief Exec Michael Capellas said: "It's an understatement to say that we're in the midst of an extremely challenging global market.''

The server and storage business also too a pasting. Sales fell 21 per cent to $2.7 billion. ®

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