Compaq to fire 5,000, lower earnings forecast

PC maker names Clarke chief financial officer

March 16, 2001|By BLOOMBERG NEWS

HOUSTON - Compaq Computer Corp., the biggest personal-computer maker, said it will fire 5,000 employees - 7 percent of its work force - and will cut its earnings estimate for the first quarter, noting weakness in the economy.

Earnings will be 12 cents to 14 cents a share for the quarter, the company said. Analysts had been expecting earnings of 19 cents.

Compaq also said Jeff Clarke will become chief financial officer, replacing Jesse J. Greene Jr.

Analysts were expecting Compaq to cut its forecast. Last week, computer-chip maker Intel Corp. said a sales slowdown had spread to its server processors.

In the fourth quarter, Compaq said sales of its more-profitable servers, which provide power to networks and Web sites, helped make up for weak PC sales to consumers and small businesses.

"We cut our numbers given the Intel announcement last week on slowing NT servers sales, which is a very profitable piece of business for Compaq," said Robertson Stephens analyst Eric Rothdeutsch, who rated Compaq stock "buy," before yesterday's announcement.

Rich Gardner, an analyst with Salomon Smith Barney, reduced his first-quarter estimate by a fourth to 15 cents, noting continued weakness in PC demand and a recent weakening in server and storage demand.

In January, Compaq forecast first-quarter profit of 21 cents a share on sales of $9.6 billion. It now expects revenue to be between $9 billion and $9.2 billion for the first quarter.

The shares of Houston-based Compaq rose 15 cents to $18.50 yesterday. They fell to about $17 in after-hours trading.

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