News release

Accelerating its Services-led Strategy, Compaq Delivers Both Solutions & Growing Momentum

Compaq Computer Corporation (NYSE: CPQ) says its strategy to become a more services-led IT solutions provider to enterprise customers is driving solid momentum in the marketplace. Reflecting on a series of major customer wins announced in just the past few weeks, Executive Vice President for Worldwide Sales and Services Peter Blackmore says Compaq is executing effectively on the strategy outlined by CEO Michael Capellas in a widely publicized memorandum last June.

"We are gaining tremendous momentum in the marketplace, proving that our strategy to lead with services and provide end-to-end IT solutions is working," Blackmore said. "The proof of the pudding is in the eating - our enterprise customers are endorsing our strategy by voting with their business.

"Every major win we have announced this fall has seen our solutions span the customer's enterprise with services and multiple technologies, from infrastructure to distributed computing and access," Blackmore stated. "All of these wins were very large, competitive tenders, totaling more than $4.5 billion in multi-year commitments. In fact, just today we announced a $250 million win with Raytheon." (See related news release: "Compaq and Raytheon Enter 3-Year Agreement Valued Up To $250 Million.")

Blackmore also noted that global telecommunications leader Ericsson is announcing that it's expanding its IT business with Compaq by more than $200 million over the next five years.

Blackmore emphasized that the publicly disclosed wins are just a small portion of Compaq's enterprise customer revenue and recent wins, because not all customers consent to publicly announce their decisions. "The fact that many of these major contracts call for commitments of three to five years is a huge endorsement. It clearly demonstrates our customers' belief in Compaq's ability to deliver innovative solutions today and in the future," Blackmore said.

Compaq's recent customer-related announcements have included:

• A $1 billion agreement to provide all Windows- and Intel-based systems for the world's largest mail delivery system - the United States Postal Service - during the next five years (renewable for a second five year period in comparable amount)
• A multi-year deal to provide services and desktop/portable computing solutions for the world's largest automobile manufacturer - General Motors
• A $95 million services contract with the world's leading manufacturer of jet aircraft engines - General Electric Aircraft Engines
• A five-year, multi-million dollar contract to provide technology, services, and support to American Express worldwide, including 25,000 Thin Clients and 400 Compaq ProLiant servers in the U.S., Europe, Asia, and South America
• A $36 million (US) agreement to provide Regus, the world's leading provider of serviced office accommodation, with IT support and infrastructure across 390 business centers in 50 countries (The contract includes data center management, local and wide area networks, hardware infrastructure, operating systems, help desk & engineering support, business continuity and e-business applications.)
• A seven-year, $25 million agreement with the University of Wisconsin-Stout to support the school's mobility initiative
• An agreement with Meijer Stores LP, a prominent operator of retail supercenters, to maintain and upgrade more than 6,000 seats in 150 locations under Compaq's Intelligent Manageability program - a suite of tools designed to simplify PC management, increase IT efficiency, and lower costs
• A three-year, $20 million per year agreement with global healthcare company Cardinal Health
• Adoption of a Compaq thin-client/industry standard server model by Chapel Hill-Carrboro City Public Schools in North Carolina, which encompasses more than 3,500 computing stations

Continuing Strength in Vertical Markets

"A key element of Compaq's strategy," continued Blackmore, "is a far greater emphasis on building and delivering integrated, repeatable solutions that create value by solving customer and industry-specific problems. Again, the tremendous response from our customers demonstrates our growing success in vertical markets." The new contracts outlined above - and other recent customer successes - build on Compaq's established presence in key vertical industries, including:

• Telecommunications

The company's strength in the industry is demonstrated by several facts: Compaq systems at telecommunications customers process 200 million credit card and collect phone calls per day, 80 percent of the billing and customer care in Europe, and the majority of all U.S. 911 emergency calls. Also, over 70 million cellular phone users rely on Compaq home location register (HLR) capability to complete their calls, without ever knowing it. Recent successes with telecommunications customers include expanded IT services business with global telecommunications leader Ericsson in a just-announced deal worth more than $200 million over the next five years.

Vodafone UK Limited - operating a digital cellular radio network with 12.8 million customers - announced this week it is deploying Compaq's TeMIP (Telecommunications Management Information Platform) solution to provide network and services management. Compaq Global Services will integrate the solution into Vodafone UK's network.

Compaq will supply Manitoba Telecom Services Inc. (MTS) with systems integration, AlphaServer platforms running Tru64 UNIX, StorageWorks technology, and services support. British Telecom recently entered into a $45 million (US) agreement with Compaq for services, and the telecommunications company in China's Szechwan province entered an agreement with Compaq worth more than $100 million.

• Finance

In the finance industry, Compaq powers the world's 15 largest stock exchanges and processes 95 percent of the world's securities transactions. In addition, 66 percent of all ATM or point of sale (POS) transactions are processed on Compaq systems and 75 percent of the world's electronic funds transfers rely on Compaq. Recent successes with finance customers include:

Bank of America recently picked Compaq to provide single-source service and support as well as hardware to the bank's corporate offices and banking center locations in the United States. In addition to extensive services, the contract calls for 4,000 professional workstations, 6,000 ProLiant servers, and 120,000 desktops.

A recently announced multi-million dollar global enterprise agreement with Willis Group Holdings - a leading global insurance brokerage firm - will standardize IT equipment and services at Willis on Compaq platforms across more than 300 offices in over 100 countries.

SunTrust Banks, Inc., the nation's ninth-largest commercial banking organization, recently named Compaq the provider of choice for a multi-million dollar technology upgrade project in more than 415 branches and 10 training offices.

BB&T Corporation, Winston-Salem, NC, signed a multi-million, two-year agreement for thousands of desktop PCs and professional workstations to be deployed in corporate offices, branches, and subsidiaries in nine states and the District of Columbia.

• Travel

Compaq's presence in the travel industry is becoming more widespread. For example, Sabre Holdings Corporation recently announced it would begin migrating its mainframe applications to Compaq's NonStop Himalaya server and database environment to create the next generation travel technology platform. The value of this recent multi-year agreement is in excess of $100 million.

A Global Enterprise agreement with Worldspan® - a global leader in the travel industry - will halve the time to deploy IT equipment and services across more than 20,000 locations in nearly 70 countries for the company.

Cathay Pacific Airways just placed thousands of Compaq iPAQ Pocket PCs in the hands of premium air passengers purchasing round-trip business or first-class tickets between Los Angeles, San Francisco, New York, Toronto or Vancouver, and Hong Kong. And British Airways recently completed a pilot project at New York's JFK Airport in which passengers could use iPAQ handheld PCs, connected via a wireless network, for real-time Internet access.

About Compaq

Founded in 1982, Compaq Computer Corporation is a leading global provider of enterprise technology and solutions. Compaq designs, develops, manufactures and markets hardware, software, solutions and services, including industry-leading enterprise storage and computing solutions, fault-tolerant business-critical solutions, communication products, and desktop and portable personal computers that are sold in more than 200 countries. Information on Compaq and its products and services is available at http://www.compaq.com.