Compaq Computer (CPQ) was down 5.6% in preopen Instinet trading. After the close Monday, the PC maker said its first-quarter profit was 12 cents per share excluding a one-time charge, down from 17 cents a year ago. The Street's lowered consensus was 13 cents.
The company said the second quarter will "continue to be challenging," with sales roughly flat with the first quarter's. Compaq also said it will eliminate 7,000 jobs, 2,000 more than it had announced in March.
cut its rating two notches to hold from strong buy.