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10/01 5:05P (DJ) +DJ Through August, Compaq Was On Track To Meet Views
-CFO Story 7150 =DJ Compaq Call -2:
Grounded Air Travel Hurt
Productivity
By Donna
Fuscaldo
Of DOW JONES
NEWSWIRES
NEW YORK (Dow Jones)--A slowdown in demand coupled with the Sept.
11th attacks
forced Compaq Computer Corp. (CPQ) to lower its earnings targets
for its just-ended third quarter, said
Jeff Clarke, chief financial
officer.
Compaq, he said, ships products that account for roughly 50% of
its
quarterly revenue in September and was on track to meet earnings
through August,
but then a series of events in September changed
that.
Clarke said the Sept. 4 announcement that Hewlett-Packard Co. (HWP)
would merge with Compaq Computer
Corp. (CPQ) caused a "temporary pause"
from
customers and
employees.
As for the attacks, the company sustained an "unbelievable"
amount of lost productivity when air
traffic was grounded, said Chief Executive
Michael Capellas, who,
along with Clarke, was speaking on a conference
call.
The attacks, Capellas said, also affected Compaq's ability to close
deals and noted there is a
large volume of shipment that did not get out during the
quarter. Capellas said Compaq ended the quarter with a larger
backlog than when it
started.
Plus, the overall weakness in the economy and "brutal" pricing hurt
supply and demand, he
said.
Capellas said the last month of the quarter could be described as
the
"perfect
storm."
That storm led Compaq, Houston, to warn that it expects to report a
third quarter loss of between 5
cents and 7 cents a share, which is far
below
previous guidance and Wall Street's expectations for earnings of 5 cents
a
share.
The company now expects third quarter revenue of between $7.4 billion
and $7.5 billion, which is also
below Wall Street analysts' view of about
$8.19
billion.
Clarke said despite the shortfall the company remains confident in
its strategic
actions and the proposed merger with
H-P.
As for how business is tracking the fourth quarter, Capellas said
visibility is "tough." He declined to provide any
financial targets for the
fourth
quarter.
Shares of Compaq were recently trading at $7.75 in after-hours
action,
according to Reuters Instinet. The stock finished the regular session
at
$8.33.
-Donna Fuscaldo, Dow Jones Newswires,
201-938-5253
<A
href="mailto:donna.fuscaldo@xxxxxxxxxxxx";>donna.fuscaldo@xxxxxxxxxxxx
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