Compaq makes up for weak PC sales

Strong enterprise system sales helped Compaq turn in fourth-quarter profits at the top end of revised earnings estimates, despite sluggish growth in the US PC market.

Compaq warned last month that sales for the quarter, which ended on 31 December 2000, would be between eight to 10 per cent below expectations. It claimed to be one of the many suppliers hit by a general slowdown in computer spending.

The hardware supplier's chairman and chief executive, Michael Capellas, said: "The strength of our enterprise business, international growth and solid services profitability offset softness in the North American personal computer market."

For its fourth quarter, Compaq saw revenues rise 10 per cent to $11.5bn. Net profits increased to $515m, or 30 cents a share, from $332m, or 19 cents a share, in the year ago quarter. Wall Street analysts had lowered their predictions from 36 to 28 cents a share after the vendor's profit warning.

The figures exclude a one-time charge of $1.8bn related to various investments, but if they are included Compaq made a loss of $672m, or 39 cents a share.

Sales in Europe, the Middle East and Africa grew at only three per cent in dollar terms compared to a 36 per cent jump in Japan, and a 26 per cent increase in Asia Pacific. Server and storage system revenues grew by 20 per cent year-on-year.