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Compaq 4Q profits off 56%
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January 25, 2000: 6:08 p.m. ET
But PC maker meets analysts' reduced forecasts; sales down 4%
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NEW YORK (CNNfn) - Compaq Computer Corp., the world's largest personal-computer maker, posted a 56 percent drop in fourth-quarter profits as it struggled to cope with falling PC prices, but the company met Wall Street's reduced forecasts.
Compaq earned $332 million, or 19 cents per diluted share, in the quarter ended Dec. 31, including a one-time gain of 3 cents per share from investment income. That compares with profit of $758 million, or 43 cents per share, a year earlier.
Analysts expected the company to earn 16 cents per share, but it was not immediately clear whether forecasters included the investment income gains in their estimates.
The so-called "whisper numbers" of investors' expectations ranged from about 18 cents to 20 cents per share.
Revenues fell 4 percent to $10.5 billion, dragged down by the effect of translating other currencies into U.S. dollars.
Sales of servers, the large computers used to manage networks of other computers, slipped 3 percent to $5.3 billion. Servers account for about half of the company's total revenues.
Sales of the commercial PC unit saw revenues slide 19 percent to $3.1 billion. The unit, which accounts for 30 percent of Compaq's total revenue, posted a loss of $79 million -- a reversal from profit of $157 million a year earlier.
But revenue from the consumer group jumped 24 percent to a record $2 billion.
Houston-based Compaq (CPQ) remains the world's biggest seller of PCs, but rival Dell (DELL) last year edged out the company in the U.S. market. The company also has struggled to rebound from management changes and to integrate some major acquisitions.
"During the second half of this year (1999) we took aggressive action to return Compaq to profitable growth, and fourth-quarter results reflect our initial success where it matters most - in the marketplace," CEO Michael Capellas said.
The results were released after Tuesday's market close. The stock finished the day down 5/16 at 32-1/4 on the New York Stock Exchange prior to the report, then slipped to 32 in after-hours trading.
For the full year, Compaq earned $569 million, or 34 cents per diluted share, including one-time items, compared with a net loss of $2.7 billion, or $1.71 per share, a year earlier.
The 1999 results include $1.2 billion in pre-tax gains from the sale of businesses and an $868 million restructuring charge, while the year-earlier results factor in $3.2 billion in charges associated with the acquisition of Digital Equipment Corp. and $393 million in restructuring costs.
Revenues rose 24 percent to $38.5 billion in 1999. 
-- staff and wire reports
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