Compaq Profit Rises Slightly; Market Share Slips
Compaq Computer Corp. said Tuesday its profit was little changed in the third quarter as it wrestled with slowing demand and lost market share to competitors.
The personal computer maker posted operating profit of $117 million, or 7 cents a share, compared with $115 million, or 7 cents, in the year-earlier period. Sales grew 5% to $9.21 billion.
The Houston-based company sold fewer PCs in the U.S. than Dell Computer Corp. during the quarter, losing its position as the nation’s biggest PC company. Compaq is facing falling prices, shortages of some parts because of last month’s earthquake in Taiwan and bloated costs it’s been trying to rein in since last year, when it bought Digital Equipment Corp.
Chief Executive Michael Capellas told analysts and investors on a conference call that the company expects sales of servers to slow in the fourth quarter, though sales of consumer PCs will be strong. He expects revenue to rise from the third quarter’s.
He also said the company is experiencing little impact from memory-chip shortages.
Estimates from analysts polled by First Call Corp. ranged from a loss of 2 cents to a profit of 8 cents. The average forecast was for a profit of 5 cents.
Corporate PC sales dropped 12% as the company lost market share to rivals.
“Compaq continues to lose ground in large corporate accounts,” Salomon Smith Barney analyst Richard Gardner, who rates Compaq “neutral,” said in a report Tuesday.
Compaq shares, which rose $1.06 to $20 before the earnings release, closed at $19.50 after the report.
At a Glance
Other earnings, excluding one-time gains or charges unless noted, include:
TECHNOLOGY:
* Online auctioneer EBay Inc. said its third-quarter operating profit rose to $3.2 million, or 2 cents a share, from $1.8 million, or 2 cents, a year ago, as it drew more users and added regional markets and products such as cars. The results were in line with the average estimate of analysts polled by First Call Corp., but less than Internet forecasts as high as 4 cents. Sales soared 170% to $58.5 million, exceeding the $57 million analysts expected. EBay announced its results after the close of regular U.S. markets, where it closed up $1.13 at $152. The stock fell as low as $139.25 in after-hours trading and electronic exchanges.
* Lucent Technologies Inc.’s operating profit jumped 50% in its fiscal fourth quarter to $972 million, or 31 cents a share. Sales gained 23% to $10.58 billion, topping forecasts, on demand for fiber-optic and data-networking products. The earnings matched the highest unpublished forecast on the Internet and beat the 29-cent average estimate of analysts polled by First Call. Analysts had expected sales of $10 billion to $10.5 billion. Sales of data-networking equipment surged 46%. Lucent expects sales to climb 17% to 20% in fiscal 2000, Chief Executive Rich McGinn said in a conference call with analysts and investors.
* Loral Space & Communications Ltd. said its net loss widened in its third quarter to $12.5 million, or 8 cents a share, from a net loss of $10.7 million, or 8 cents. Per-share results at the satellite-communications company are after the payment of preferred dividends.
* Nortel Networks Corp. reported a profit of $380 million, or 28 cents a share, a turnaround from a loss of $181 million, or 17 cents, a year ago, as sales of fiber-optic and Internet access gear more than doubled. The results beat estimates of 26 cents. Sales rose 30% to $5.39 billion.
* StarMedia Network Inc., which runs a network of Web sites that target a Latin American audience, said its third-quarter loss widened to $25.2 million, or 43 cents a share, from $11.5 million, or 96 cents, as it spent more on product development and marketing. Revenue soared to $5.62 million from $1.65 million. The results were better than the 46-cent loss analysts expected.
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OTHER INDUSTRIES:
* Estee Lauder Cos. said its first-quarter earnings rose 15% to $82.6 million, or 32 cents a share. The cosmetic company’s sales rose 10% to $1.09 billion, with help from a pickup in demand in Asia.
* Gabelli Asset Management Inc., a fund company that sold shares to the public in February, said third-quarter earnings grew 36% to $10.2 million, or 34 cents a share, as assets under management advanced 34%. Revenue increased 28% to $44.1 million.
* Lear Corp., maker of automotive interiors and seats, said its third-quarter earnings climbed 82% to $39.3 million, or 58 cents a share, 2 cents better than estimates, as sales jumped 57% to $3.05 billion. Record U.S. vehicle sales and cost-cutting in Europe boosted results.
