BBC Wednesday, 25 July, 2001, 21:31 GMT 22:31 UK Sharp fall for Compaq profits

Compaq: Pushed off the top spot by Dell

Compaq computer has posted sharply lower profits and sales in the second quarter of the year.

Profits at the world's second largest personal computer maker fell to $67m compared to $338m in the same period a year ago.

Including a special restructuring charge of $439m, the firm ran up losses of $279m during the three months.

Sales fell to $8.45bn compared to $10.14bn in the same period a year ago, and $9.2bn in the previous three months.

A slowdown-provoked slump in demand has been the root of the computer maker's troubles.

New focus

Earlier this month, Compaq sent a tremor through the stock markets after cutting its sales forecasts and axing a further 4,000 workers.

The company also stressed that it would retreat from the front line of PC sales after suffering from intense price competition from its rival Dell.

Compaq now plans to refocus its business on software and computer services.

And its new focus gave investors some signs of a future upturn, with profits from the services sector rising to $1.7bn.

Global slump

Worldwide personal computer sales fell for the first time in 15 years during the third quarter, according to research firm Gartner Dataquest.

And Compaq noted that European PC sales have now begun to mirror the decline seen in the US.

But the company also said that the situation in the US had begun to stabilise.

Compaq's troubles cannot solely be attributed to the slowdown.

Its rival Dell has steadily been gaining market share, overtaking Compaq as the world's most popular personal computer maker earlier this year.

"In the short-term, the market remains volatile and thus difficult to predict with much certainty," said the company's chief executive and chairman Michael Capellas.

Shares of Compaq were actively traded after hours but remained roughly steady at about $14, since results were similar to expectations.

-- Anonymous, July 25, 2001