Compaq reported fourth quarter earnings up 43 per cent and 11 cents ahead of Wall Street estimates, sending its shares leaping amid continuing speculation that it is about to acquire Digital Equipment's hardware or networking operations.
Compaq remained tightlipped about the rumours at its results briefing in London today, but it is in a strong position to go on the acquisition trail. It quadrupled its cash holdings to $4 billion, compared to this time last year, which served to reinforce takeover speculation. Joe McNally, vice president and managing director of Compaq UK, said: ?If we choose to go down the acquisition trail then the money is there.?
Its 43 per cent increase in net income to $462 million sent Compaq's shares up almost four points to close at 82 3/8. Earnings per share rose to $1.64 compared with $1.17 last year, well above analysts' estimates of $1.75. Worldwide sales rose 15 per cent to $5.4 billion and profit margins improved.
McNally said Compaq UK had experienced 30 per cent revenue growth in 1996 but that as a whole the EMEA (Europe, Middle East and Africa) region had experienced 15-20 per cent growth rates, held back somewhat by slower than expected expansion in Germany and France.
Compaq is currently the fifth largest computer company in the world behind IBM, NEC, Fujitsu and Hitachi and the largest supplier of PCs. The company?s overall goal is to become a $40 billion corporation and the third largest computer company in the world. ?We currently have a 25 per cent share of the corporate marketplace but in order to meet our objectives we need to be market leaders in the small and medium sized business and the home and consumer markets,? said McNally.
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