Compaq's profit dropped by 60% in first quarter; shift to low-price machines is seen hurting results for next two periods
Article Abstract:
Compaq Computer Corp experiences a steep drop in sales and earnings, as a result of the overall slow economy and the company's decision to sell less expensive products. Compaq has traditionally sold premium-priced products to large corporate customers, a strategy which resulted in high margins. However, with the microcomputer market becoming commodity-based, Compaq has been forced to slash prices and change its marketing focus. Compaq expects the change in market focus to result in higher sales volume, but lower profits and revenues for at least the next two quarters. First quarter sales fell to $783 million from $970.8 million for the same period a year ago. Net profit for the period fell to $45.3 million, compared with $114.3 million a year ago. As a result of the news many analysts downgrade their projections for coming quarters and the company's stock slides 12 percent.
Publication Name: The Wall Street Journal Western Edition
Subject: Business, general
ISSN: 0193-2241
Year: 1992
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Compaq profit surged by 43% in 2nd quarter; strong demand for new line of low-priced products cited by computer firm
Article Abstract:
Compaq Computer Corp reports net income up 43 percent on a 15 percent increase in sales, in the 2nd qtr of 1992. Net income was $29 million, or 35 cents a share, which compares with $20.3 million, or 23 cents a share, in the same period last year. Sales increased more than $100 million, to $827 million from $717.8 million. Compaq has embarked on a new low-price strategy, which is apparently working well. When Compaq's good news was announced, the company's stock rose 10 percent, closing on Jul 22, 1992, at $27.75. Competition has grown fierce in the computer industry, and profit margins have narrowed. Industry observers say growth will be necessary if Compaq is to continue to succeed.
Publication Name: The Wall Street Journal Western Edition
Subject: Business, general
ISSN: 0193-2241
Year: 1992
User Contributions:
Comment about this article or add new information about this topic:
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