Compaq latest tech company to issue earnings warning

Wednesday, December 13th 2000, 12:00 am

By: News On 6

HOUSTON (AP) _ Compaq Computer Corp. became the latest high-tech company to warn that slow sales will cause fourth quarter revenue and earnings to fall short of market expectations.

The world's largest computer systems maker on Tuesday said revenue is expected to be between $11.2 billion and $11.4 billion, as much as 10 percent below expectations, though still 7 percent above year-ago levels.

Earnings, excluding one-time charges, are expected to be between 28 cents and 30 cents per share. The consensus estimate of analysts surveyed by First Call/Thomson Financial was 36 cents per share.

Investors sent shares down $1.47 to $19.30 in early trading on the New York Stock Exchange.

Compaq will report actual figures Jan. 23.

Michael Capellas, the company's chairman and chief executive officer, said Compaq was optimistic entering the fourth quarter until the North American market quickly softened.

``Business activity in the rest of the world remains on track,'' Capellas said. ``We are taking the actions required to adjust to changing market conditions.''

Slow sales previously have caused Intel, Gateway and Apple to warn investors that earnings for the current quarter won't meet expectations.

Capellas said the approximately $1 billion revenue shortfall is accounted for ``one-third, one-third, one-third'' by slow sales in consumer personal computers, commercial personal computers and servers.

On a conference call, Chase H&Q analyst Walter Winnitzki said he and other industry observers are concerned that sluggishness in consumer sales might next year spread to major information technology buyers in the corporate world.

``Corporate accounts are still rolling out projects,'' Capellas said, though he added that current market conditions are a reason for concern.

Overall, Capellas remains optimistic about 2001.

``Our current 2001 plan calls for 10 percent revenue growth and 25 percent growth in earnings per share over the revised estimates for the fiscal year 2000,'' Capellas said. ``Although this is lower than our previous guidance, it still reflects strong year-over-year improvement.''

According to First Call, analysts had expected roughly a 40 percent increase in earnings in 2001. Capellas said he expects the second half of the year to be better than the first.