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Compaq profits jump 66 percent

The profit train just keeps on rolling for the world's largest PC maker, as the company reports strong first-quarter sales.

The Compaq Computer (CPQ) profit train just keeps on rolling.

The Houston, Texas-based PC maker reported income of $387 million for its fiscal 1997 first quarter, a 66 percent increase over the previous year. Compaq officials pointed to efficient asset management techniques that reduced inventory and a high demand for Compaq products as reasons for the jump. Worldwide sales were up over 14 percent to $4.8 billion for the quarter.

Tech stocks have been on a rollercoaster so far this spring, with many on Wall Street predicting a temporary slowdown in certain market segments. Not so for Compaq. The company beat estimates for the quarter by nearly four percent, with earnings per share rising to $1.36, up from 85 cents for the same period a year ago.

Compaq is the worldwide leader in sales of PC and server systems based on Intel microprocessors. The company has also made forays into the networking hardware market, recently augmenting its line of workgroup hubs, switches, and routers by purchasing Microcom (MNPI), a modem and remote access server maker, for $280 million.

The strong first quarter follows the equally impressive numbers that ended 1996. The company reported profits of $462 million for its fourth quarter, or $1.64 per share, well above analysts estimates. Compaq finished the year with annual sales growing 23 percent to $18.1 billion, a 28 percent increase over the previous year.

"We expect strong growth throughout 1997," said Compaq president and CEO Eckhard Pfeiffer in a statement. "Compaq is positioned to gain market share and increase profits. We are clearly focused on what customers are looking for."