Compaq’s Profit Comes In Flat, Unchanged From Year-Ago Quarter
Compaq Computer Corp. said Tuesday that its first-quarter profit was unchanged from a year ago on virtually flat revenue, as the world’s largest personal computer maker struggled with a slow transition to direct sales and a lingering year 2000-related slowdown.
Profit from operations was $281 million, or 16 cents a share, the same as the 1999 first quarter, when the company slashed its profit forecast in half and ousted Chief Executive Eckhard Pfeiffer. The results met the average estimate of analysts surveyed by First Call/Thomson Financial.
Sales rose a slight 1% to $9.51 billion from $9.42 billion, falling short of some analysts’ estimates of $9.6 billion.
Compaq’s corporate customers, many of whom delayed buying PCs on fears the machines wouldn’t recognize the date change to 2000, were slow to resume purchases after the first of the year. Corporate sales account for about 30% of Compaq’s total revenue.
“This isn’t the best quarter for them,” said Tim Ghriskey, a portfolio manager with Dreyfus Corp., which owns 2.19 million Compaq shares. “PCs were slow to ramp up coming out of Y2K.”
“People want to see signs that things aren’t getting much worse, and that’s what they have here,” said Ashok Kumar, an analyst with U.S. Bancorp Piper Jaffray, who rates Compaq a “buy.” “This isn’t a sign of improvement.”
Compaq’s corporate PC sales fell 7%, to $2.9 billion, on an operating loss of $19 million, down from a profit of $24 million a year ago.
Chief Executive Michael Capellas, who took over in July, said he expects sales and profit to pick up in the second half. He said the company will meet analysts’ revenue estimates of $10.2 billion for the second quarter, an 8.3% increase from the second quarter of 1999.
The Houston-based company warned investors in January that revenue probably would rise about 15% this year, down from 24% last year.
Compaq shares rose $3.75 to close at $29.81 Tuesday on the New York Stock Exchange and were little changed from that after the earnings release.
At a Glance
Other earnings, excluding one-time gains or charges unless noted, include:
* EBay Inc., the biggest Internet auctioneer, said first-quarter profit climbed to $6.3 million, or 5 cents a share, including one-time items, from $3.8 million, or 3 cents a share, as the value of goods sold on its site passed $1 billion. EBay’s operating earnings were 6 cents a share, exceeding the 3 cents analysts expected and the highest “whisper” estimates of 5 cents. Sales doubled to $85.8 million from $42.8 million, well beyond forecasts of $80.2 million. EBay also announced a 2-for-1 stock split. Its shares closed up $11.69 at $153.56 on Nasdaq ahead of the earnings announcement, and then surged to $160 in after-hours trading.
* JDS Uniphase Corp., the biggest maker of parts used in fiber-optic equipment, reported a profit of $85.8 million, or 11 cents a share, excluding acquisition costs, for its fiscal third quarter, a penny better than forecasts. JDS had pro forma net income of $33.2 million, or 5 cents a share, a year ago. Sales climbed to $394.6 million from $154.9 million.
* Juno Online Services Inc. said its first-quarter loss widened to $47.6 million, or $1.28 a share, from $6.77 million, or 32 cents, on higher marketing expenses. Analysts expected a much larger loss of $1.36 a share. Revenue more than doubled to $24 million from $9.72 million.
* LSI Logic Corp. said first-quarter operating profit jumped to $87.9 million, or 26 cents a share, a penny better than estimates, from $11.2 million, or 4 cents, a year ago. Revenue rose 33% to $615.2 million.
* Nextlink Communications Inc., a telephone company controlled by cellular pioneer Craig McCaw, said its first-quarter loss widened to $181.9 million, or $1.34 a share, from $102.3 million, or $1.09, a year ago, as the company increased spending to expand its network. Revenue more than doubled to $105.8 million from $48.6 million.
* Nortel Networks Corp. reported a first-quarter operating profit of $355 million, or 23 cents a share, better than the 18-cents-a-share consensus estimate and the highest whisper estimate of 21 cents. Sales soared 48% to $6.32 billion.
* PeopleSoft Inc. posted operating profit of $11 million, or 4 cents a share, beating estimates of 2 cents, on a 7.2% rise in sales to $375.4 million. The business-management software company had a loss of $171.2 million, or 66 cents, a year earlier.
* Bell Atlantic Corp.’s operating profit rose 10% to $1.27 billion, or 80 cents a share, buoyed by surging sales of data services and its entry into the New York long-distance market. The results matched analyst forecasts. Revenue rose 7.1% to $8.53 billion at Bell Atlantic, which is on track to become the largest local phone company when it completes its $88.8 billion purchase of GTE Corp.
* SBC Communications Inc., the nation’s largest local phone company, said first-quarter profit rose 12% to $1.91 billion, or 56 cents a share, from $1.71 billion, beating the consensus estimate of 52 cents, on higher revenue from data services and its wireless business. SBC, which provides service through Pacific Bell, Southwestern Bell and other brands, said revenue rose 8.4% to $12.6 billion.
* Tandy Corp., owner of the RadioShack electronics chain, said earnings grew 29% in the first quarter to $67.9 million, or 34 cents a share, beating analyst forecasts of 31 cents. Sales rose 18% to $1.05 billion.
