Compaq Keeps Trimming Guidance
Updated from 5:37 p.m. EDT.
It's doing it again. After reporting second-quarter results Wednesday evening that plunged from year-ago levels,
(CPQ) warned investors that its third-quarter sales would come in below expectations.
For its second quarter, Compaq said it earned $64 million, or 4 cents a share, matching the lowered consensus estimate of analysts polled by Thomson Financial/First Call and far below the 21 cents a share the company posted last year. Revenue came in at $8.5 billion, about $60 million lower than expected.
Then Compaq got down to the warning. The company said it expects third-quarter sales of $8 billion to $8.4 billion and earnings per share of 7 cents to 9 cents. Analysts were expecting sales of $8.7 billion, according to Multex.com, and earnings of 9 cents a share.Earlier this month, Compaq warned that poor demand would cause its second-quarter results to fall far short of previous estimates. Compaq at that time also said it would fire 1,500 more workers than it had previously planned. The company set plans to fire 5,000 workers back in March and raised that number to 7,000 in April. As with IBM's (IBM) second quarter, services was the best-performing segment, making up 45% of sales and bringing in $271 million in income. Without that segment, Compaq would have lost more than $100 million. The company lost about $155 million in its access segment, which includes the consumer PC business, where unit shipments plummeted 30% from the year-ago period. On the conference call following the earnings release, CFO Jeff Clarke called these results "unacceptable," and said the consumer business would be profitable in the fourth quarter of 2001. As everyone already knew it would, price-cutting took its toll on the quarter. Gross profit margins came in at 21.5%, down a full percentage point from the previous quarter and off two percentage points from last year's second quarter.
U.S. PC market share in the second quarter of 2001
|Company||2001 share||2000 share||Growth|
|Source: International Data Corp.|
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