Digital buy sees Compaq Q3 income drop 78%

Compaq's net income dropped 78% to $US115 million in the third quarter, ended September 30, its first full quarter since completing the acquisition of Digital. But it expects profits to improve in the fourth quarter, when it will focus on completing the integration of Digital into Compaq's operations, the company says.

Compaq’s net income dropped 78% to $US115 million in the third quarter, ended September 30, its first full quarter since completing the acquisition of Digital.

But it expects profits to improve in the fourth quarter, when it will focus on completing the integration of Digital into Compaq’s operations, the company says.

The PC manufacturer’s sales totalled $US8.8 billion, an increase of 36% over the same period the previous year, Compaq says. There was strong revenue growth in sales from its distribution channels, which it says grew 38% year-on-year, as well as in its services business.

Compaq completed its acquisition of Digital in June, and as a result reported a loss of $US3.6 billion in the second quarter, ended June 30.

Intel has reported its highest quarterly revenue ever, but says net profits for the third quarter were essentially flat year-over-year.

The chip giant says revenue of $US6.7 billion for the third quarter, ended September 26, was up 9% from third-quarter 1997 revenue of $US6.2 billion and up 14% from second-quarter 1998 revenue of $US5.9 billion.

The revenue increase was driven by strong worldwide demand for PC products and allowed the company to post record unit shipments of microprocessors. However, demand was strong across Intel’s entire product portfolio, the company says.

Intel’s net income in the third quarter was essentially flat with the third quarter of 1997, at $US1.6 billion, or 89 cents a share, up one cent from the same quarter last year.

Looking ahead, Intel expects revenue for the fourth quarter of 1998 to be up slightly from third-quarter revenue of $US6.7 billion and, consistent with the company’s earlier expectations, Intel’s revenue in the second half of this year is expected to be greater than in the first half.

Since the end of the first quarter, Intel has reduced its headcount by approximately 2000 people, excluding about 1800 people which were added as a result of the acquisition of Digital’s semiconductor manufacturing operations.

Baan expects to post a loss of (US) 13 to 16 cents per share on revenue of $US190 million to $US195 million for the third quarter, ended September 30.

Baan blames the shortfall on global economic turbulence, which the company says made many customers reluctant to buy, and on the fact that customers are spending more on making their existing systems year 2000-compliant.

The company will announce its third-quarter results on October 28.

Hayes, once the modem industry leader, has filed voluntary petitions to reorganise under Chapter 11 of the US Bankruptcy Code.

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