Compaq’s Profit in Quarter Beats Expectations

Compaq Computer Corp. eked out a second-quarter profit, rather than breaking even as expected, as the leading personal computer maker cleared out a glut of machines that dragged down first-quarter earnings.

The earnings of $32 million, or 2 cents a share, include Compaq’s June purchase of Digital Equipment Corp. Year-earlier profit, without Digital, was $465 million, or 30 cents. The results for both periods exclude several charges. Sales, including Digital’s sincethe June 11 acquisition, were $5.83 billion. A year ago, sales for Compaq alone were $5.52 billion.

Chief Financial Officer Earl Mason said the aggressive price-cutting Compaq used to clear out its PCs is likely to ease, meaning that third-quarter profit will rise slightly from second-quarter levels.

Mason said he’s comfortable with estimates for earnings of 6 cents a share in the third quarter and 37 cents in the fourth. He’s also comfortable with the 1999 estimate of $1.72 a share.

Shipments from the company’s distributors and dealers rose 36% from a year ago, and shipments to customers were 17% higher.

Compaq shares fell 13 cents to close at $33.56 on the New York Stock Exchange.