Study Shows Information Technology Leasing to Increase in 2002
74 Percent of Companies That Now Lease Plan to Lease Same Amount or More This Year
Compaq Financial Services First to Recognize Trend By Extending Zero Percent Leasing to Customers on Total Solutions
HOUSTON, January 3, 2002
A survey conducted over the past month of approximately 700 IT decision makers indicates that chief technology officers and chief financial officers recognize that leasing helps stretch their IT budgets and simplify the financial lifecycle management process of their information technology.
Nearly 60 percent of the respondents, with more than 100 desktops/laptops and who plan to lease in 2002, stated that the current economic downturn would have an impact on their company's decision to lease more IT equipment in 2002 than in 2001. The survey, commissioned by Compaq Financial Services Corporation and conducted between Dec. 21 and Jan. 2, also showed that 41 percent of companies said that the main reason they would lease in 2002 was to keep their IT equipment from becoming obsolete. A total of 23 percent stated that cash flow management was the reason, while 14 percent claimed that asset management services was their primary reason for leasing in 2002.
To enable customers to take advantage of the benefits of leasing, Compaq Financial Services Corporation, the wholly owned leasing and financial services subsidiary of Compaq Computer Corporation (NYSE: CPQ), is offering zero percent leasing which gives its customers the ability to lease a total Compaq solutionfrom hardware and software to servicestoday and pay for it over 24 months with a zero percent lease rate(1). Irv Rothman, president and chief executive officer of Compaq Financial Services, said reaching out to IT decision makers in this challenging economy with a zero percent leasing offer makes good business sense.
"In an environment where technology budgets may be limited, but technology needs are greater, leasing is a superior alternative for IT decision makers," Rothman said. "For many companies, buying equipment through big capital outlays is just no longer financially practical. Leasing a total Compaq solution is an affordable way for these businesses to effectively manage their cash flow while at the same time staying ahead of the technology curve."
Zero Percent Leasing Program for Compaq Solutions:
- 24-month/0 percent lease rate is applicable for all transactions above $499.
- Offer valid from January 1, 2002 to March 31, 2002.
- No down payment required.
- Easy calculation of monthly paymentjust divide the equipment cost by 24. For example, the monthly payment for a $1200 desktop would be $50 per month.
- Costs of software and services qualify for the 0 percent lease rate provided those costs do not exceed 25 percent of the total cost of the hardware, software and services in the transaction.
About the Survey
The survey was Internet based. A list of self identified IT professionals with decision-making influence and/or responsibility were contacted via e-mail and asked to complete the survey. A total of 670 responses were received between December 21 and January 2. Of that total, 149 identified that their company maintained more than 100 desktops/laptops and that they planned to lease some portion of their IT equipment in 2002. Hill and Knowlton, a worldwide public relations agency, conducted the survey.
Other Survey Results
Of companies that plan to lease in 2002 and that maintain over 100 pieces of IT equipment, including desktops and laptops:
- 38 percent use cash as the primary method of payment for IT equipment, compared to 34 percent who lease.
- 15 percent are in technology industry, 13 percent in manufacturing, 13 percent in telecommunications, 11 percent in financial services, 10 percent in engineering/architecture/design, 5 percent in consulting, 5 percent in retail, 1 percent in media/entertainment, with 27 percent in other industries.
- 41 percent cited technology obsolescence protection as the main reason for leasing IT equipment, followed by 23 percent that cited cash flow management, 14 percent that cited asset management services, 13 percent that cited technology disposition concerns, and 9 percent that cited low monthly payment.
Of companies that maintain under 100 pieces of IT equipment, including desktops and laptops:
- 41 percent use cash as the primary method of payment for IT equipment, compared to 37 percent who use credit cards.
- 51 percent said that current economic conditions will have an impact on their company's decision to lease more IT equipment in 2002 than in 2001, while 49 percent responded that the current economic situation will not affect their decision.
- 23 percent are in the consulting business, 13 percent in retail, 8 percent in manufacturing, 7 percent in technology, 6 percent in engineering/architecture/design, 6 percent in financial services, 5 percent in media/entertainment, 3 percent in telecommunications and 29 percent in other industries.
- 30 percent cited cash flow management as the main reason for leasing IT equipment, followed by 30 percent that cited low monthly payment, 26 percent that cited technology obsolescence protection, 9 percent that cited asset management services, and 5 percent that cited technology disposition concerns.
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.
1 This 0% lease offer is available through Compaq Financial Services Corporation (CFSC) to qualified commercial customers in the U.S. and is subject to credit approval and execution of CFSC documentation. Implicit interest rate, assuming lessee does not exercise a fair market value purchase option at the end of the lease term and timely returns leased equipment to CFSC at the end of the lease term and disregarding any charges payable by lessee other than rent payments (such as taxes, fees, and shipping charges). Under this program, a FMV lease term of 24 months is available for qualifying lease transactions between $499 and $100,000. $0 down excludes a first rent payment due in advance. Costs of software and services qualify for the 0% implicit lease rate provided they do not exceed 25% of the total cost of all hardware, software, and services. This offer is valid through March 31, 2002 to qualified commercial customers in the U.S., subject to credit approval and execution of CFSC lease documentation. Other restrictions may apply and CFSC reserves the right to change or cancel this program at any time without notice.
Compaq and the Compaq logo are trademarks of Compaq Information Technologies Group, L.P. Product names mentioned herein may be trademarks and/or registered trademarks of their respective companies.
This news release may contain forward-looking statements that involve risks, uncertainties and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. Risks, uncertainties and assumptions include the possibility that the Hewlett-Packard/Compaq merger does not close or that the companies may be required to modify aspects of the transaction to achieve regulatory approval or that prior to the closing of the proposed merger, the businesses of the companies suffer due to uncertainty; the market for the sale of certain products and services may not develop as expected; that development of these products and services may not proceed as planned; that Compaq and Hewlett-Packard are unable to transition customers, successfully execute their integration strategies, or achieve planned synergies; other risks that are described from time to time in Compaq and Hewlett-Packard's Securities and Exchange Commission reports (including but not limited to Compaq's annual report on Form 10-K for the year ended December 31, 2000, HP's annual report on Form 10-K for the year ended October 31, 2000, and subsequently filed reports). If any of these risks or uncertainties materializes or any of these assumptions proves incorrect, Compaq's results could differ materially from Compaq's expectations in these statements. Compaq assumes no obligation and does not intend to update these forward-looking statements.