Compaq Europe was yesterday being told to keep silent about last Friday’s US announcement of expected first quater financial meltdown. This may be because the hard time that Compaq Europe has had swallowing Digital Equipment Corp. In the US, Compaq blamed the shortfall on lower-than-anticipated market demand following the holiday season and increased competitive pricing in the commercial PC sector. Dataquest analyst, Thomas Rener, concurs with this view of the US market, pointing to the aggressive pricing war in the sub-$1000 PC market.
However, Rener suggests that the picture in Europe is quite different. Admitting that he was mostly working on gut feeling – breakdowns of the expected regional shortfalls are currently unavailable – Rener said that Compaq’s merger with Digital Equipment Corp had been an irritant to the European arm of Compaq. Rener cited restrictive labor laws as a major hindrance to Compaq swallowing DEC in France and Germany – although he admitted it was hard to quantify how much this had hurt Compaq Europe in financial terms. Rener said that lower margins on PCs, although not as drastically lowered as the US, were still an issue in Europe; as was the decline of DEC’s core market, high-end servers. But Rener said that the competition over sub-$1000 PCs was much less of an issue in Europe.
