Compaq Computer today reported a substantial second-quarter net loss, reflecting charges to cover the cost of its US$8.4 billion acquisition of Digital Equipment Corp., but the results were in line with Wall Street's lowered expectations.
Compaq (CPQ), the world's leading maker of personal computers, lost $3.6 billion in the quarter, compared with a net profit of $257 million in the same period a year earlier. Revenues rose 5.7 percent, to $5.8 billion from $5.5 billion. The results included $3.2 billion in write-offs of technology acquired from Digital (DEC), another $430 million in charges for restructuring, and other adjustments related to the Digital deal.
Excluding the charges, Compaq reported net income of $32 million, in line with the company's previous guidance to Wall Street analysts that it expected to more or less break even for the quarter.
Compaq acquired Digital on 11 June. Compaq said the combined companies' balance sheet at the end of the second quarter had $4.6 billion in cash and very little debt.
Compaq's chief executive officer, Eckhard Pfeiffer, said in a statement that the company had achieved its goal of reducing inventory backlogs among distributors of its corporate PC lines. The backlogs had hurt its competitiveness and dampened earnings results in the first half of 1998.
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It's profit time: Time Warner (TWX) today reported an unexpected quarterly profit of $101 million, thanks to sparkling performances from its cable, publishing, and movie and television studio operations.
The media and entertainment group said net income was 4 cents per share, beating the First Call consensus estimate for a loss of 4 cents per share. A year earlier, Time Warner earned $30 million, with a per-share loss of 9 cents after preferred dividend requirements.
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Kodak's surprise: Imaging giant Eastman Kodak (EK) said its second-quarter net profit rose 35 percent, easily beating analysts estimates despite an 8 percent drop in sales. The company's net earnings rose to $495 million from $368 million one year ago. Diluted earnings per share rose 36 percent to $1.51 per share, compared with $1.11 a year ago. The First Call forecast was $1.13.
