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Compaq's earnings suffer 81% drop

Compaq is sounding surprisingly upbeat as reports of the company’s earnings were released: the company reported that second-quarter earnings fell a massive 81% to $67 million.

Compaq is sounding surprisingly upbeat as reports of the company’s earnings were released this week: the company reported that second-quarter earnings fell a massive 81% to $67 million. Despite this, CEO Michael Capellas said that he was "pleased" with the company's performance.

It’s a big change from last year’s position, when Compaq posted second-quarter earnings of $388 million. Including a $493 million restructuring charge, Compaq actually posted a second-quarter loss of $279 million.

Sales of enterprise systems, including servers and storage devices, fell 21%. PC sales fell 22%. Compaq said bad performances in overseas markets means a turnaround is not in the offing anytime soon. As a result, Compaq said third-quarter revenue would is likely to miss earlier forecasts as well.

Capellas, in a statement, said that he was "pleased with the company's solid execution in this challenging environment."

The news wasn’t all bad, however: Compaq's revenue from its Global Services arm increased 7% in the second quarter compared with last year, and it managed to reduce inventory by almost $1 billion in the first six months of 2001.

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