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Tuesday, 23 January, 2001, 22:45 GMT
Compaq underpins shares surge
Michael Capellas, chief executive, Compaq
Michael Capellas: "International growth offset weak PC sales"
Optimists who have shrugged off profits warnings to drive technology shares higher gained cheer on Tuesday from Compaq.

Compaq, the world's number one maker of personal computers, reported a 55% rise in profits for the last three months of 2000.

While the figure fell below forecasts made last autumn, a profits warning in December prompted analysts to trim their expectations.

Income of $515m over the quarter beat Wall Street predictions by almost 10%.

"It looks like they came in at the high end of revised estimates," said analyst David Bailey of Gerard Klauer Mattison.

"Relatively speaking, it looks like a pretty solid quarter. Revenues are respectable in the circumstances."

Nasdaq surge

The data underpinned the hopes of US investors who have bought shares in technology, media and telecoms firms this year despite warnings from firms such as Dell.


The undertone of the market is not weakening due to the disappointments in earnings. It is a market that wants to go higher

Peter Cardillo, Westfalia Investments

Texas Instruments on Monday became the latest tech firm to disappoint, warning of a 10% drop in revenue for the first three months of this year, compared with the last quarter of 2000.

But investors who believe that the 40% drop in technology stocks last year means reduced earnings are already factored in to share prices renewed their buying spree on Tuesday.

The tech-weighted Nasdaq index rose a further 3%, bringing its rise so far this year to almost 15%.

"The undertone of the market is not weakening due to the disappointments in earnings," said Peter Cardillo, director of research at Westfalia Investments. "It is a market that wants to go higher."

Weak PC sales

Compaq credited growth in its broader operations for offsetting a $6m loss in its PC business.

"The strength of our enterprise business, international growth and solid service profitability offset some weakness in the the North American personal computer market," said chief executive Michael Capellas.

On Monday, Texas Instruments, the world's top ranking manufacturer of chips for mobile phones, blamed weak sales in the first quarter of 2001 on stockpiling.

Makers of mobile phones and communications infrastructure equipment are often working through excess inventory rather than ordering new chips, the firm said.

Shares in the firm, whose chips are present in about two thirds of the world's cell phones, closed down $3-1/2 at $45-1/16 on Tuesday.

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See also:

22 Jan 01 | Business
Dell warns on profits
18 Jan 01 | Business
Microsoft earnings meet forecasts
16 Jan 01 | Business
Intel results 'better than expected'
02 Jan 01 | Business
A gloomy year for stock markets
12 Dec 00 | Business
Compaq, Kodak warn on profits
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