, the world's largest maker of personal computers, reported second-quarter earnings that matched Wall Street expectations, helped by strong growth in its sales of servers and commercial PCs.
Compaq reported second-quarter income of $362 million, or 21 cents a diluted share, excluding investment gains, compared to a loss of $184 million, or 10 cents a share in second-quarter 1999. That matched the consensus estimate of Wall Street analysts according to
First Call/Thomson Financial.
Including $25 million it made in investment gains during the quarter, Compaq earned $387 million, or 22 cents a diluted share, in the latest quarter.
Compaq said its results were helped by a strong 40% growth in sales of industry standard network server businesses, and a return to profitability for its commercial PC business. Gross margin also improved by three percentage points versus the prior year to 23.6%.
The solid second-quarter performance came despite indications that growth in U.S. personal computer shipments slowed considerably during the quarter. A report released by
Monday found that U.S. unit shipments for the second quarter grew at a slow 7% year-over-year pace, compared with 15% year-over-year growth in the first quarter.
Compaq also offered upbeat expectations for the remainder of the year, saying it expects to deliver "double-digit" growth in the second half of the year.
"I'm very confident in our ability to meet our third quarter and full year objectives," said Michael Capellas, president and chief executive at Houston-based Compaq.
Compaq's revenue in the second quarter rose 7.4% to $10.1 billion, compared with $9.4 billion in the year-earlier period.
The biggest contributor to the company's earnings was its enterprise computing unit, which makes network and Internet servers and storage products, and posted a 9% increase in revenue to $3.4 billion.
The company's commercial personal computing group, which makes lines of desktop computers for businesses, posted a 3% gain in revenue to $3.3 billion. The group also returned to profitability a quarter earlier than anticipated, posting an operating profit of $62 million, vs. a loss of $224 million in the second quarter of 1999.
Shares of Compaq rose slightly in after-hours trading following the news. Compaq recently traded up 9/16, or 2% at 28, after closing the regular session up 1/2, or 2% at 27 7/16.