Thanks to stronger-than-expected sales, Compaq Computer Corp. last week said it will post a profit rather than a loss for the fourth quarter of 2001. Direct-order PC maker Gateway Inc., however, last week warned that its fourth-quarter sales fell far short of Wall Streets expectations.
Houston-based Compaq said it expects its revenue for the fourth quarter to exceed $8 billion. Previous guidance and consensus estimates of analysts had put fourth-quarter sales at no more than $7.8 billion and said the company would have a loss of 3 cents per share.
Compaq Chairman and CEO Michael Capellas said in a statement that he was proud of his employees for focusing on business despite the distractions of the proposed merger of Compaq and Hewlett-Packard Co., which was announced last September.
While Compaqs surge in sales was good news, Andrew Neff, an analyst with New York-based Bear, Stearns & Co. Inc., said the rise in revenue was less than impressive considering how poorly the company had fared the previous quarter.
"PC demand was better than feared, although with a 7 percent sequential gain from a weak third quarter, it was not overly strong," Neff said.
In the third quarter, Compaq posted a loss of $499 million as sales plunged 33 percent from a year earlier to $7.48 billion.
Meanwhile, PC rival Gateway, which recently relocated its headquarters from San Diego to less costly office space in nearby Poway, Calif., said it expects to report revenue of approximately $1.16 billion for the quarter. Market analysts polled prior to Gateways announcement had been projecting quarterly revenue of $1.39 billion and a loss of a penny per share (excluding one-time charges), according to Thomson Financial/First Call. Despite the shortfall, Gateway expects to post a small fourth-quarter profit before taxes and one-time charges.