Compaq's China group upbeat

By Staff and wire reports

HONG KONG, China -- Compaq has said it expects sales and revenue growth in China in the second half to match or slightly exceed the first half of the year.

The operating profit from its China division rose 84 percent year-on-year in the first six months and revenue increased 13 percent from the same period last year, the company said in a statement.

"We are very encouraged by Compaq's performance in China over the first half of the year, especially in light of a challenging global business climate," said Tony Pakinson, director of Compaq's Enterprise Business Group for Greater China.

He said revenue from the Greater China region -- which covers China, Taiwan and Hong Kong -- accounts for about three percent of Compaq's total turnover.

Worldwide sales of the world's number two PC maker fell to $8.45 billion in the second quarter ended June from $10.14 billion in the same period last year.

The global economic slowdown pushed Compaq's second quarter pro forma net earnings, which exclude one-time charges, to $67 million from $200 million the previous quarter.

China to beat forecasts

Richard Kong, a Compaq director for its Access Business Group (ABG) in the Greater China division, said he expected sales of Compaq PCs and handheld devices to match or exceed those in the first half.

"China may be doing much better than what the forecast is. There will be a chance there will be some upside," Kong said.

Taiwan and Hong Kong sales would be flat or lower in the second half from the first half, he added.

Demand in China was starting to slow at the latter part of the second quarter but consumer sentiment has recovered after Beijing clinched its bid to host the 2008 Olympics, Kong said.

"I think that will have some effect on Hong Kong," he added.

Compaq's ABG in the region reported 96 percent growth in consumer business and 14 percent growth in commercial business PC products in the first half.

The ABG group, which is responsible for the sale of desktop PCs, iPAQ personal digital assistants and other handheld devices, contribute about 41 percent of the total revenue in the Greater China region.

Enterprise growth

Compaq's enterprise business group (EBG) in the region reported 77 percent growth in its storage business, 35 percent growth in Alpha/Tandem Server business and 15 percent growth in PC server business in the first half.

Pakinson was confident the EBG sector should see better results for the rest of the year.

"I look at the projects that we have coming up... I'm pretty confident that we should see better second half than the first half," he said.

Compaq said it signed technology solutions deals with Taiwan's Chunghwa Telecom, China Unicom, the Taiwan Stock Exchange, the Shenzhen Stock Exchange and Hong Kong's CLP Power.

Reuters contributed to this report.