Compaq eyes 50% Net sales

Compaq has outlined plans for almost half of its corporate PC sales to be direct by Q4, while slashing prices on its business desktops. The vendor today cut prices by up to a third on its Deskpro EP, EN and Workstation AP lines, including discounts of 19 per cent on the 550MHz EP, 20 per cent on the Workstation AP250, and 30 per cent on the EN Space Saver 600MHz. Meanwhile, Compaq's CEO Michael Capellas has admitted the company's ailing corporate PC business needs to be turned on its head and will not be profitable until at least September. According to today's Wall Street Journal, Capellas told Wall Street analysts that the vendor intended a quick shift to direct sales first in the US, then in Europe. It aims to hike direct sales on corporate PCs from their current nine per cent to 40 per cent by Q4. And in the US, Capellas wants 60 per cent of all desktop sales to be direct by the end of this year. Capellas said analysts could expect the Inacom deal, which saw Compaq fork out $307 million to buy the PC assembler earlier this month, to "kick in pretty quickly". Regarding financial forecasts, he said he was "comfortable" with the estimated pre-tax profit of $1.82 billion for this year. He told analysts to expect sales of around $43 billion, up 10 per cent on 1999. The company also aims to boost sales on services, and what the Wall Street Journal labelled "big-computers", by 14 per cent to 17 per cent. And it hopes to raise between $50 million and $100 million a quarter by selling off some of its investments. Capellas said the company planned to upgrade its Alpha minicomputer range in March, which should haul in an extra $1 billion in revenue for 2000. Compaq's corporate corporate PC business, which made a loss of $448 million on sales of $12.2 billion last year, has been losing market share and sales to direct seller Dell for the past two years. ® Related stories PC sales up 23 per cent last year despite Y2K Compaq/IBM trash PC prices