Compaq hopes for better future

Company expects better results later in the year

Compaq, the world's second largest personal computer maker, has reported a fall in its first quarter profits, hit by a slowdown in PC sales and aggressive pricing by its rivals.

Profits came in at the lower end of analysts expectations at $200m compared with $296m a year ago.

"While we believe that the second quarter will continue to be challenging, it also provides an opportunity to make significant improvements in our business model," Chairman and Chief Executive Michael Capellas said in a statement.

Compaq has blamed a sharp decline in North American personal computer sales in the wake of the slowing economy.

Sales elsewhere around the world have remained strong, Mr Capellas said.

In March Compaq issued a profits warning and also revealed its intention to cut 5000 jobs, equal to 7% of its workforce.

Compaq said it would wait until its first-quarter results to detail where the job cuts would occur, but the company did not elaborate on the layoffs in its earnings report.

Scottish cuts

In March, Compaq announced plans to cut 700 jobs in Scotland.

The company said it plans to reduce its workforce at its plant in Erskine, Renfrewshire, through a restructuring of its business.

It said the plant will continue to manufacture made-to-order personal computers, as well as servers.

The production of many types of computer will now be transferred to a Taiwanese company with a factory in the Czech Republic.