Compaq Lowers Fourth Quarter Revenue and Earnings Expectations; Company to Hold Webcast at 5 p.m. EST Today

Dec 12, 2000, 00:00 ET from Compaq Computer Corporation

    HOUSTON, Dec. 12 /PRNewswire/ -- Compaq Computer Corp. (NYSE:   CPQ) today
 reported that revenue and earnings for its fourth quarter ending Dec. 31,
 2000, will be below market expectations.
     Revenue for the fourth quarter is expected to be between $11.2 billion and
 $11.4 billion, 8 to 10 percent below expectations, but approximately 7 percent
 above the same quarter last year.  Earnings from operations, excluding one-
 time charges, will be between $0.28 and $0.30 per diluted common share, about
 eight cents below consensus expectations, but 50 percent above fourth quarter
 1999.  Actual results will be announced Jan. 23, 2001.
     "We ended the third quarter with positive market momentum in virtually all
 of our business segments," said Michael Capellas, chairman and chief executive
 officer.  "While we had a good start to the fourth quarter, it is now clear
 that market confidence has wavered and that we will be affected by the general
 softness in U.S. consumer, small and medium business and dot com markets.
 Business activity in the rest of the world remains on track.
     "We are taking the actions required to adjust to changing market
 conditions.  Channel inventories are currently at planned levels of four weeks
 for commercial products and just under seven weeks for consumer products.  We
 will continue to balance growth and profitability as well as tightly manage
 expenses," he said.
     Changing market conditions also have affected certain of the company's
 strategic investments.  As a result, the company will make downward
 adjustments in the valuations of some holdings -- principally CMGI and its
 related assets.  The company anticipates taking a non-operating, non-cash
 charge in the fourth quarter.
     Business Outlook
     "Overall, our outlook for 2001 remains positive, although we expect the
 second half of the year to be stronger than the first half," Capellas said.
 "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.  Although this is lower than our previous guidance, it still reflects
 strong year-over-year improvement.  I remain very confident in the long-term
 strength of the information technology market and in Compaq's ability to be
 one of the clear leaders."
     The company will hold an audio webcast at 5 p.m. EST today with Michael
 Capellas, Compaq chairman and chief executive officer, and Jesse Greene,
 senior vice president, finance and administration, and chief financial
 officer.  The session will include brief remarks and a question and answer
 period.  The conference can be accessed at
     About Compaq
     Compaq Computer Corporation, a Fortune Global 100 company, is the largest
 supplier of computing systems in the world.  Compaq designs, develops,
 manufactures and markets hardware, software, solutions, and services,
 including industry-leading enterprise computing solutions, fault-tolerant
 business-critical solutions, and communications products, commercial desktop
 and portable products, and consumer PCs.
     Compaq products and services are sold in more than 200 countries directly
 to businesses, through a network of authorized Compaq marketing partners, and
 directly to businesses and consumers through Compaq's e-commerce Web site at  Compaq markets its products and services primarily to
 customers from the business, home, government, and education sectors.
 Customer support and information about Compaq and its products and services
 are available at
     Compaq and the Compaq logo are registered with the U.S. Patent and
 Trademark Office.  This press release and conference call will contain
 forward-looking statements based on current expectations that involve a number
 of risks and uncertainties.  The potential risks and uncertainties that could
 cause actual results to differ materially include:  market conditions,
 particularly in North America, increased competitive environment and pricing
 pressures, component shortages, delays in the implementation of changes in
 delivery models, delays in product rollout schedules, slow acceptance for new
 form factors, employee retention, disruptions related to restructuring
 actions, the financial condition of resellers, delays in new systems
 implementation, operational inefficiencies related to sales cycles, equity
 investment volatility, and emerging market political or economic instability.
 Further information on the factors that could affect Compaq's financial
 results is included in Compaq's Securities and Exchange Commission (SEC)
 filings, including the latest Annual Report on form 10-K and the most recent
 report on Form 10-Q.

SOURCE Compaq Computer Corporation