The current personal computer market is so tough that you have to be as good as Compaq Computer Corp to make money from it, and the company’s go-go growth has slowed to a stately 14%, while profit growth is down to 9%. Nevertheless, the company says it sees a very strong second half. Its gross profit margins have returned to 23% of sales, up from 21.05 last quarter, and We believe we are in excellent position to gain market share and achieve improved profitability for the balance of the year, Eckhard Pfeiffer said. As part of its asset management, Compaq said it has reduced its inventories by $400m to $1,540m. It has also improved its inventory turns and it has decreased days sales outstanding to 60 days from 65 days, which together caused Compaq’s cash balance to increase 86% on a sequential basis to $1,900m. All of Compaq’s new leadership products have been contributing to a strong order book, Pfeiffer said. And, in the months ahead, we have many new leadership products yet to announce, including special internetworking devices and Pentium Pro workstations. As for Europe, the company is very satisfied with its earnings this side of the water for last quarter, despite a clear slowdown in market growth throughout the region. Profit margins in Europe are above the corporate average. We are very satisfied with results in Europe, Andreas Barth, Compaq chief executive for Europe, the Middle East and Africa, told Reuters. Our strategy in Europe was not to fight for market share, but to be in the number one position and at the same time make a substantial contribution to the corporation. Barth said all evidence so far points to growth in unit sales of just 5% in the second quarter and a decline in overall revenue.
