Economic Upturn In 3Q?

Compaq, IBM and others beat Wall Street, but execs remain cautious

Industry executives last week warned Wall Street not to expect a quick end to the recession even as technology heavyweights beat reduced earnings expectations for the fourth quarter.

Compaq Computer Chairman and CEO Michael Capellas told analysts that he expects only "moderate growth in the first half" with pent-up demand accelerating a recovery in the second half of the year.

>> IBM joined others in predicting that the economic recovery won't begin until the second half.


Compaq reported sales of $8.5 billion and income of $92 million, or 5 cents per share, for its fiscal fourth quarter. Analysts had expected revenue of $7.6 billion to $7.8 billion and a loss of 3 cents per share.

IBM joined other vendors in predicting that the economic recovery won't begin until the second half, even as it surpassed expectations slightly for its fiscal fourth quarter ended Dec. 31.

"The first half doesn't appear to have a different economic outlook than the year we just came though," said IBM CFO John Joyce.

IBM had fourth-quarter net income of $2.3 billion, or $1.33 per share, down 10 percent. Analysts had predicted per-share earnings of $1.31. Fourth-quarter revenue reached $22.8 billion, down 11 percent.

Chip maker Intel exceeded Wall Street profit expectations by 4 cents per share, reporting income of $998 billion, or 15 cents per share, on revenue of $7 billion. Although Intel ended 2001 on "a note of stability," Intel CFO Andy Bryant said there has been no indication of a worldwide economic turnaround.

Check Point Software Technologies also outpaced expectations, posting net income of $77 million on $122.5 million in revenue for its fourth quarter. That compares with net income of $81 million on $140.4 million in revenue for the year-earlier period.

The company continues to face a challenging global economy, said Check Point Chairman and CEO Gil Shwed in a conference call. But at the same time, "security and VPN solutions are very high on the purchasing priority list for corporations," he said.

Check Point expects first-quarter earnings and revenue "to be flat, maybe down," reflecting economic conditions, Shwed said, adding that the company anticipates growth in the second quarter.

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