Compaq, Gateway Say They Will Post Profits

Two struggling personal computer makers, Compaq Computer Corp. and Gateway Inc., said Monday that they made money in the fourth quarter, surprising analysts and investors and providing another hopeful sign that the technology slump may be ending.

Houston-based Compaq, the second-biggest PC maker behind Dell Computer Inc., had a fourth-quarter profit before unspecified expenses as sales rose for the first time in a year. San Diego-based Gateway said it had a pretax profit excluding costs after four straight quarters of losses. But the company missed analysts’ estimates.

Compaq had sales of more than $8 billion, after forecasting as little as $7.6 billion, on higher demand from businesses and holiday shoppers. The company didn’t give a per-share result; analysts expected a loss of 3 cents a share.

Compaq’s report follows statements by analysts that the PC industry’s fourth-quarter sales beat expectations.

PC retail sales rose 30% from the third quarter, compared with a typical 15% to 20% increase, said Richard Gardner, an analyst at Salomon Smith Barney Inc.

Gateway’s fourth-quarter sales fell 52% to $1.16 billion. Sales averaged $1,660 a unit, beating the company’s estimate.

Compaq shares rose 25 cents to $11.93 in after-hours trading, after closing up 29 cents to $11.68 on the New York Stock Exchange. Gateway shares fell 35 cents to $9.90 after the announcement in after-hours trading; they had closed up 43 cents to $10.25 on the NYSE.