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Compaq lifts guidance
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January 7, 2002: 12:50 p.m. ET
Computer maker expects 4Q profit, beating Wall Street expectations.
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NEW YORK (CNN/Money) - Compaq Computer Corp. said Monday it expects to post a fourth-quarter profit instead of a loss and that its revenue also will beat Wall Street forecasts.
Just before the U.S. markets opened, the Houston-based personal computer maker said it expects to post a profit when it reports full results Jan. 16.
Analysts' recent expectations had been for a loss of 3 cents per share, which is what Compaq executives had told them to expect when they reported the company's third-quarter results.
The world's second-largest PC computer maker said it expects $8 billion in fourth-quarter revenue, while Wall Street analysts expected revenue of $7.63 billion, according to First Call.
Compaq had entered the quarter aiming for revenue ranging between $7.6 billion and $7.8 billion.
"These results represent strong execution and Compaq's solid momentum in the marketplace," CEO Michael Capellas stated.
Shares of Compaq (CPQ: up $0.16 to $11.55, Research, Estimates) were trading higher on the New York Stock Exchange early Monday afternoon.
The company's stock has fallen more than 70 percent over the past year, with much of that decline coming last fall and earlier this winter.
In addition to slack demand for PCs in both the consumer and commercial markets in the face of a weakening economy, investors have been concerned about the potential impact on Compaq's business of Hewlett-Packard's (HWP: down $0.29 to $22.87, Research, Estimates) proposed $22 billion takeover offer.
The proposed deal - which has fallen under increasing pressure from several key shareholders - prompted speculation on Wall Street that Compaq customers, uncertain about the company's future, might turn elsewhere for their technology needs.
Prior to Compaq's announcement Monday, Lehman Brothers upgraded its rating on Compaq to a "strong buy" from a "buy."
Saying that he expects the proposed deal to fall through, Lehman analyst Dan Niles said the negative impact on Compaq's fourth-quarter was not as severe as he previously had anticipated.
"The merger uncertainty being a big concern hasn't seemed to affect their corporate demand as much as we would have expected, so we think [the fourth quarter] ended up pretty well for both consumer and corporate [demand] for them," Niles said in a note to clients. 
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