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Compaq Q1 PC Revenue Drops 18%

4/19/2002 09:27:00 AM Eastern

Houston - Compaq Computer PC sales decreased 18 percent in the first quarter, reaching $3.5 billion, compared with $4.3 billion in the year-ago period, sequentially, revenue for this segment was off 6 percent in the first quarter.

Compaq's Access segment, the portion of the company dealing in consumer PCs, posted an operating loss of $36 million in the three months, ended March 31, compared with a loss of $110 million in the same period in 2001. The first quarter included a sequential operating improvement of $33 million over the fourth quarter.

Compaq attributed the reduced operating loss in the first quarter to continued customer acceptance of new products and continued business model improvements.

Overall, company revenue for the first quarter was $7.7 billion, down from $9.1 billion in the year-ago three months. Year-ago revenue was restated to reflect the new revenue accounting method.

Net income for the first quarter was $44 million, compared with a loss of $91 million year over year. Including an accounting charge of $222 million in the year-ago period, the net loss for that quarter was $131 million.

In this year's first quarter, Compaq earned $65 million, excluding merger costs, down from $214 million in the year-ago period, which excluded restructuring charges.

Gross margin in the first quarter was flat sequentially at 20.6 percent, reflecting an improved product mix in the Access segment.

First-quarter operating expenses were $1.4 billion, a sequential reduction of $101 million, but down $359 million year over year. This represents the fifth consecutive quarter of operating expense reductions, said Compaq.

Compaq said it was not distracted in the first quarter by delays in the closing of its merger with Hewlett-Packard. The company said it expects the merger to move forward as planned.