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Compaq Computer Corp has pulled out all the stops this quarter with sales of units up 56% on last year’s total, helping the Houston, Texas-based computer manufacturer to beat the consensus of earnings estimates by 3 cents at $0.71per share (before merger related charges). Third quarter earnings rose 41.6% to $517m on revenue up 30.9% at $6.474bn but the figures include a one off charge of $44m relating to the earlier merger with Tandem Computers Inc (CI No 3,188). Compaq’s chief financial officer, Earl Manson, also hinted at a strong end to the year with comments about the company’s increasing market share. Confidence is at an all time high at the company, prompting the initiation of Compaq’s first ever cash dividend program. Shareholders will receive a surprise dividend of $.03 per share on an ongoing quarterly basis. The news was combined with the announcement of a two for one stock split and both schemes are aimed at widening Compaq’s shareholder base. The dividend will allow the big mutual funds to take an interest in the stock for the first time, dividends being a pre-requisite for highly conservative fund managers. The stock split, Compaq’s second in less than three months, has the aim of making the shares more accessible to individuals than the current $75 price allows. A dividend re- investment plan will be available to seasoned high tech investors with an anti cash dividend stance.

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CBR Staff Writer

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