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Compaq buys back $1 bln in stock

A day after computer stocks took a beating, Compaq (NYSE: CPQ) shares rebounded slightly Friday on news that it will repurchase up to $1 billion of its common shares.

The computer maker said it plans to buy its shares on the open market. The company will suspend its systematic repurchase program, begun in 1998.

Shares of Compaq rose more than 5 percent, 1.16 to 22.66, early in Friday's session.

Yesterday, shares of Compaq fell on Gateway's (NYSE: GTW) fourth-quarter profit warning. Gateway dropped with other computer makers, including Dell Computer (Nasdaq: DELL), Apple Computer (Nasdaq: AAPL) and Hewlett-Packard (NYSE: HWP).

According to Michael Capellas, Compaq's Chairman and CEO, the buy back was driven by the current price level of Compaq's stock, which "offers a tremendous investment opportunity for the company."

The company's Board of Directors also declared a regular quarterly cash dividend of $0.025 per common share.