Compaq Computer Corp broke through the $30bn revenue barrier and produced fourth quarter earnings significantly ahead of Wall Street’s estimates, boosted by a positive contribution from Digital Equipment Corp, the $9.6bn acquisition of which was announced a year ago and completed six months ago. The Houston, Texas computer systems manufacturer reported net earnings per share of 43 cents, when the Street had expected only 37 cents, according to First Call. However, the markets did not get too excited about this, probably because the earnings surprise was mainly the result of non-operating activities, such as a lower tax rate and high gross margins. Also the figures released compare the fourth quarter 1998 combined businesses of Compaq and DEC, whereas the 1997 number feature only Compaq’s business. For the year Compaq recorded net losses of $2.74bn, after charges totaling $3.6bn, against profits last time of $1.86bn which included a $252m in charges on revenues that rose 27% to $31.17bn. Gross margins improved by 1.5% to 26.4% in the quarter and operating expenses also fell, finishing at 18% in the fourth quarter, compared to 23% in the third. Compaq didn’t break out the figures in terms of its various businesses nor will it permit journalists on its results call, so details are scarce. Cash and equivalents at the year-end stood at $4.09bn, down from $6.42bn at the end of 1997. Compaq, which announced the results before the market opened, saw its shares open up slightly, before dipping and closing down $2.1875 or 4.4% at $47.0625.
