Compaq to cut 5,000 jobs, miss estimates

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Thursday March 15 07:00 PM EST Compaq to cut 5,000 jobs, miss estimates

By Joe Wilcox CNET News.com Compaq Computer on Tuesday warned it would miss first-quarter earnings estimates and cut 5,000 jobs. The announcement, which followed a week of analyst downgrades and a profit warning from Intel, put Compaq's earnings per share between 12 cents and 14 cents, or flat year over year. The company projected revenue of $9 billion to $9.2 billion, 4 percent lower than last year.

A consensus of analysts polled by FirstCall had expected earnings of 17 cents a share including the recent downgrades.

Houston-based Compaq expects to take a restructuring charge of $125 million to $150 million. The company also plans to cut 7 percent of its work force, or about 5,000 jobs.

CEO Michael Capellas blamed the shortfall on the slowing U.S. economy.

"Clearly we are operating in a challenging environment," he said. "The result of the actions we are taking today, coupled with our strong array of new products and solutions, will enable significant improvements in our business model and position us well in the mid- and long-term."

Compaq also announced changes in management. Jeff Clarke will replace Jesse Greene as chief financial officer. Greene will become Compaq's senior vice president of strategic planning. Mike Larson, who had been responsible for Compaq's consumer division, will become senior vice president of the Access Business Group.

Compaq's retrenching comes amid a general slowdown in the PC industry. Morgan Stanley analyst Gillian Munson lowered estimates for the quarter and the year for Compaq on March 9, after Intel said that server sales to date have been lower than expected.

"While Intel isn't the only data point to look at when analyzing Compaq, it is a pretty big directional data point relative to other news in the market," she wrote.

http://dailynews.yahoo.com/h/cn/20010315/tc/compaq_to_cut_5_000_jobs_miss_estimates_1.html

-- Martin Thompson (mthom1927@aol.com), March 15, 2001


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