Analysts are warning that customers should be cautious buying certain products from Compaq in this unstable period, as the company confirmed disappointing first quarter results.
Compaq reported revenue of $9.4 billion for the quarter ended 1 March, 1999. Net income was $281 million or 16 cents per share, in line with the company?s profits warning issued earlier this month. Product sales for the quarter were $7.8 billion, an increase of $2.2 billion above the first quarter of last year.
Compaq said its sales performance was affected by a number of factors. The first quarter performance for the commercial PC sector was below internal expectations. Less than anticipated market demand, increased competitive pricing and growth below plan, all contributed to the shortfall.
In a statement, Compaq chairman and acting chief executive, Ben Rosen, commented: ?Despite our overall corporate strength, our first quarter results are disappointing and unacceptable. We will aggressively pursue the actions necessary to realise our enormous potential, achieve our traditional levels of profitable growth and build long term shareholder value.?
Industry analysts Gartner Group said that the results, combined with the sudden departure of Compaq chief executive Eckhard Pfeiffer two days ago, should make users consider more carefully than usual what commitment they make to the company during this period of turmoil.
Gartner analyst Kevin Knox commented: ?Enterprises considering Compaq for strategic purchases other than Intel PCs and servers should be more cautious until new management realigns and clarifies Compaq?s commitment to those technologies.?
IDC analyst Peter Lemon, also warned that Compaq may be facing similar inventory problems to the same period last year where it flooded the channel in the run up to the release of its first quarter results.
?This quarter is again like the same quarter a year ago. Compaq realised it needed to buoy up the figures and it stuffed the channel and they?ve done exactly the same thing again. They have denied this but its crystal clear that this is what they?ve done," he said.
Opinion across a range of financial and IT analysts is agreed - that the future of the Digital technologies is once again unclear.
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