Results - Alpha axe hits Compaq profit

Compaq's decision to can Alpha for NT has hit its fourth-quarter profit because it was forced to pay out up to $150m (£90.7m) in compensation to its channel.

Compaq's decision to can Alpha for NT has hit its fourth-quarter profit because it was forced to pay out up to $150m (£90.7m) in compensation to its channel.

The vendor posted a small drop in fourth-quarter turnover, despite profit plunging by more than half due to pricing pressure on its PCs and servers.

Compaq warned last month that profit would be affected by the cost of giving replacements to its third-party channel for Alpha-based machines (CRN, 1 September 1999).

For Compaq's fourth quarter ended 31 December, turnover fell by four per cent to $10.5bn. Profit fell 56 per cent to $332m compared with $758m in the same period the year before.

However, Michael Capellas, chief executive of Compaq, anticipated turnover for 2000 would grow by 15 per cent over the 1999 total of $38.5bn.

Sales of Compaq's enterprise solutions and services group fell three per cent year on year to $5.3bn. Sales from the commercial personal computing group fell 19 per cent to $3.1bn.

But there were some bright spots for the firm. Services' turnover grew three per cent to $1.8bn and the consumer group's turnover rose by 24 per cent to $2bn.