News release

Compaq Reports Fourth Quarter
And Full Year Results

News Summary

• Record Fourth Quarter Revenue of $11.5 Billion, Up 10 Percent Year-Over-Year
• Server and Storage Revenue Up 20 Percent
• Operating Profit of $757 Million, Up 80 Percent
• Associated Files ⁽¹⁾:
  • Financial Statements (Adobe PDF format)
  • Financial Discussion (Adobe PDF format)
  • Press Release (Adobe PDF format)

Compaq Computer Corporation (NYSE: CPQ), a leading global provider of enterprise technology and solutions, today reported revenue of $11.5 billion for the fourth quarter ended December 31, 2000, an increase of 10 percent year-over-year, or 19 percent in constant currency.

Net income from operations for the quarter was $515 million, or $0.30 per diluted common share, an increase of $0.14 cents. Results exclude a previously announced one-time $1.8 billion charge primarily for the write down of CMGI Inc. stock acquired in a non-cash exchange for AltaVista Co. in 1999. Including the one-time charge, the company reported a net loss of $672 million, or ($0.39) per diluted common share.

"The strength of our enterprise business, international growth and solid services profitability offset softness in the North American personal computer market," said Michael Capellas, chairman and chief executive officer. "Our server and storage revenue grew 20 percent year-over-year with strength across all our high-end product lines. Industry standard server revenue was up 24 percent, business critical server revenue was up 17 percent and storage revenue was up 17 percent. Revenue outside of the United States grew 26 percent in constant currency."

Compaq revenue grew 10 percent in North America; 24 percent in Latin America; 26 percent in Asia Pacific; 36 percent in Japan; and, 16 percent in Greater China. Europe, Middle East, and Africa grew 3 percent in dollars or 22 percent in constant currency.

Fourth quarter gross margin, as a percentage of revenue, was 23.7 percent, up 1.5 percentage points compared to a year ago. Operating expense totaled $2 billion, or 17.1 percent of revenue for the quarter, down a percentage point year-over-year.

"In summary, revenue was up 10 percent, gross margin was up 1.5 percentage points, operating expense was down a full percentage point and operating profit was up 80 percent. It's all about profitable growth," Capellas said.

Full Year 2000 Results

Revenue for the year ended December 31, 2000, totaled $42.4 billion, an increase of 10 percent over the prior year, or 15 percent in constant currency.

Net income from operations was $1.7 billion, up more than three-fold over the prior year. Including non-recurring items, net income for the full year was flat with last year at $569 million, or $0.33 per diluted common share.

Business Outlook

"While market conditions will be difficult in the first half of the year, we will continue to differentiate ourselves by developing innovative products, integrating them into solutions and serving the global market," Capellas continued. "The importance of information technology continues to grow, and customer acceptance of our offerings is high.

"For the full year 2001, we are comfortable with analyst estimates of earnings per share growth in the 20 to 25 percent range," he said.

Earnings Conference Webcast

Compaq will hold its fourth quarter Webcast at 5:30pm EST (4:30pm CST) today. Webcast details are at http://www.compaq.com/newsroom/presspaq/012301/index.html.