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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 17, 1999
COMPAQ COMPUTER CORPORATION
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 1-9026 76-0011617
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(State or Other Jurisdiction (Commission) (IRS Employer
of Incorporation) File Number Identification No.)
20555 SH 249
HOUSTON, TEXAS 77070
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(Address of Principal Executive Offices) (Zip Code)
(281) 370-0670
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(Registrant's telephone number, including area code)
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS.
In a release dated June 17, 1999, Compaq Computer Corporation (NYSE: CPQ)
announced that it expects a loss for the second quarter of up to $.15 per
share. The Company also announced a strategic realignment to improve
execution and an anticipated substantial third quarter restructuring charge.
The news release is attached as Exhibit 99.
ITEM 7. EXHIBITS.
Exhibit 99 News Release dated June 17, 1999 is attached.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: June 17, 1999
COMPAQ COMPUTER CORPORATION
By: /s/ Linda S. Auwers
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Linda S. Auwers
Vice President, Associate General
Counsel and Assistant Secretary
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COMPAQ COMPUTER CORPORATION P.O. BOX 692000 NEWS RELEASE
PUBLIC RELATIONS DEPARTMENT HOUSTON, TEXAS 77269-2000
TEL 281-514-0484
FAX 281-514-4583
http://www.compaq.com
[LOGO OF COMPAQ COMPUTER CORPORATION APPEARS HERE]
FOR IMMEDIATE RELEASE
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COMPAQ EXPECTS LOSS IN SECOND QUARTER
COMPANY ANNOUNCES STRATEGIC REALIGNMENT TO IMPROVE EXECUTION; EXPECTS
SUBSTANTIAL Q3 RESTRUCTURING CHARGE
HOUSTON, JUNE 17, 1999 - Compaq Computer Corporation (NYSE:CPQ) today
announced that it expects a loss for the second quarter of up to $.15 per share.
"The operational issues that affected Compaq in the first quarter continued to
influence our business this quarter," said Benjamin M. Rosen, Chairman and
acting Chief Executive Officer. "While we have the best line-up of products,
solutions and services in the industry we have not performed to our potential.
Pricing pressures in the PC segment, inadequate revenue growth, and a
non-competitive cost structure are the contributing factors to our expected
shortfall."
For the second quarter, Rosen said that both revenues and gross margins are
expected to be flat to down sequentially from the first quarter. Operating
expenses will increase from the first quarter as a result of incremental
goodwill amortization from Compaq's recent Internet acquisitions and the
expenditures that are needed to support the Company's longer-term goals.
Compaq also announced a plan for the major realignment of its business
structure to enhance the execution of its strategy and fully leverage the
Company's vast capabilities.
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"In the two months since the change of management at the company, we have
taken a deep look into the strengths and challenges of Compaq," said Rosen. "We
have determined that significant structural changes are required to enable this
company to realize its enormous potential and secure its position as the
preferred information technology partner for global customers.
"The changes we are making today are aimed squarely at the objectives
identified at the outset: to improve execution of our strategy, speed
decision-making, get closer to our customers and accelerate growth. This also
will allow us to reduce costs and have a more concentrated focus on investment
in growth," said Rosen.
Rosen outlined several major aspects of the realignment, with the most
fundamental change being the establishment of three global business groups -
Enterprise Solutions and Services, Personal Computer, and Consumer - each with a
separate, market-driven, profit-and-loss accountability.
The Enterprise Solutions and Services Group, headed by Enrico Pesatori,
Senior Vice President and Group General Manager, is being formed through the
integration of the Company's Enterprise Computing Group and Compaq Services. It
will be responsible for the global delivery of NonStop eBusiness solutions and
the products and services that make up those solutions.
The Personal Computer Group will continue to be led by Mike Winkler, Senior
Vice President and Group General Manager. The Consumer Group will continue to
be headed by Mike Larson, Senior Vice President and Group General Manager.
Additional elements of the realignment include the:
- Creation of a global Sales and Marketing group - led by Peter Blackmore,
Senior Vice President, Sales and Marketing - with responsibility for
sales processes across all business group lines;
- Establishment of a dedicated organization to manage all of Compaq's
eCommerce activities;
- Continued building of a world-class supply chain with end-to-end
alignment from demand management to delivery;
- Creation of a customer advocacy organization, combining Compaq's quality
and customer satisfaction organization with its customer advocacy
initiatives.
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"The new structure will provide clear go-to-market objectives for each of
three global business groups. Each group will have end-to-end alignment focused
on meeting customer needs, with accountability for customer satisfaction and
cost structures appropriate to their target markets," said Michael Capellas,
acting Chief Operating Officer.
Capellas also said that associated with the realignment, Compaq expects to
take a substantial restructuring charge in the third quarter. Once fully
executed, the realignment plan is designed to eliminate $2 billion in ongoing
operating costs.
"The actions we are taking today are designed to take full advantage of the
breadth and depth of Compaq's capabilities to restore the Company's growth and
financial performance," said Rosen. These statements regarding expected results
are based on forecast information and are subject to change and review. The
Company expects to announce its second quarter results on July 28, 1999.
COMPAQ BACKGROUND
Compaq Computer Corporation, a Fortune Global 100 company, is the
second-largest computer company in the world and the largest global supplier of
computer systems. Compaq develops and markets hardware, software, solutions,
and services, including industry-leading enterprise computing solutions,
fault-tolerant business-critical solutions, enterprise and network storage
solutions, commercial desktop and portable products and consumer PCs. The
Company is an industry leader in environmentally friendly programs and business
practices.
Compaq products are sold and supported in more than 100 countries through a
network of authorized Compaq marketing partners. Customer support and
information about Compaq and its products are available at
http://www.compaq.com.
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# # #
This release contains forward-looking statements based on current expectations
that involve a number of risks and uncertainties. The potential risks and
uncertainties that could cause actual results to differ materially include the
failure of systems associated with order fulfillment, the failure to close
certain sales contemplated prior to the end of the second quarter 1999; changes
in product mix; inventory risks due to shifts in market demand; continued
competitive factors and pricing pressures; and market responses to pricing
actions and promotional programs. Further information on the factors that could
affect Compaq's financial results are included in its SEC filings, including the
annual report on Form 10-K for the year ended December 31, 1998, and the
quarterly report on Form 10-Q for the quarter ended March 31, 1999. Compaq,
Registered U.S. Patent and Trademark Office. Product names mentioned herein may
be trademarks and/or registered trademarks of their respective companies.
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For further information, media may contact:
Compaq Computer Corporation Jim Finlaw 281-514-6137 [email protected]
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Compaq Computer Corporation Alan Hodel 281-518-8932 [email protected]
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Investor Relations Contact:
281-514-9549 OR 800-433-2391
[email protected]
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