Compaq Computer lowers Q1 earnings forecast, plans to cut 5000 jobs

Compaq Computer Corp.on Thursday warned that its first-quarter earnings would fall short of expectations amid a PC price war and a softening U.S. economy, and said it would cut about 5,000 jobs, or 7%of its workforce, in a bid to slash costs. Compaq lowered its earnings outlook for the first quarter of fiscal 2001 to a range of 12 cents to 14 cents per share, essentially flat with the first fiscal quarter of fiscal 2000. The analysts' consensus had been 18 cents, according to First Call/Thomson Financial, compared with 16 cents reported by the company in last year's first quarter. Compaq also said it would merge its commercial and consumer PC operations into a single group. Compaq has recently been focusing attention on powerful business computers, storage and devices, as part of its strategy to maintain margins in the midst of the cooling PC market. The company, which has said it would not sacrifice profits solely for the sake of its share in the PC market, did say it would become more aggressive to increase its share of the overall information technology market. Compaq said it expected first-quarter revenues between $9.0 and $9.2 billion, roughly 4 percent below the first quarter of fiscal 2000. Analysts had expected Compaq to report first quarter sales of $9.6 billion, according to First Call.

Related stock : (NIL)