HOUSTON -- Compaq Computer Corp. (CPQ) said Thursday that it expected break-even earnings in the second quarter and to shoulder through a "transitional" third quarter before its now-completed merger with Digital Equipment Corp. (DEC) starts adding to earnings.
Compaq made the announcement ahead of a highly anticipated meeting with Wall Street analysts Thursday evening in New York, and just hours after the Digital's shareholders approved the US$9 billion acquisition.
CFO Earl Mason said Compaq expected to take acquisition-related charges for an undisclosed amount in the second quarter tied to the merger. Excluding the charges, Compaq expects to report break-even profits.
The second quarter projections appear to be in line with Wall Street's previously lowered expectations. The prior consensus called for a profit of 1 cent per share in the June quarter, according to First Call, which compiles such figures.
By contrast, Compaq reported earnings of 30 cents per share in the second quarter of 1997, before a personal computer inventory glut, especially in its corporate PC line, and an effort to boost overall manufacturing and distribution efficiencies began eating away profits earlier this year.
About 72 percent of Digital shareholders voted to approve the merger, erasing the last hurdle to the deal that makes Compaq the second largest computer-maker in the world, behind IBM.
