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COMPAQ SAID last week that continuing slow sales throughout the year will result in a second-quarter loss of up to 15 cents per share, instead of an expected gain of 20 cents. It announced plans to restructure, which will include the formation of new business groups, unspecified redundancies and a restructuring charge of up to $2bn.

The world's second largest PC maker has had a bad year. Sales have dropped while Dell and Hewlett-Packard have won market share at its expense. In April, its chief executive officer, Eckhard Pfeiffer, was forced to resign after profits achieved only half-expected levels, other executives have left since then. The company is still looking for a CEO.

Acting CEO, Benjamin Rosen, said the operational issues that hampered it in the first quarter, including a non-competitive cost structure, still beset the company and stop it realising its potential. The reorganisation will see the formation of three global business groups with separate profit and loss accountability. The enterprise solutions and services group will be led by Enrico Pesatori. The personal computer group will continue to be led by Mike Winkler. The consumer group will continue to be run by Mike Larson. A global sales and marketing group, led by Peter Blackmore, will also be formed.

IN WASHINGTON, Microsoft called its hostile witness, AOL senior vice- president, David Colburn, to the stand as it tried to show that accusations that it had illegally stifled competition to protect the dominance of its Windows operating system became irrelevant after AOL bought Netscape for $10.2bn in order to compete with Microsoft. However, after Colburn repeatedly said he was unfamiliar with e-mails between AOL chairman Steve Case and other executives about the issue, judge Thomas Penfield Jackson grew increasingly sceptical.

"You have long since exhausted this witness's personal knowledge," he told Microsoft lawyer, John Warden. When Warden said he was trying to show that the browser was a central issue in the deal that redefined the parameters of competition in the market, Jackson said: "Well, [Colburn] isn't going to agree to that and he hasn't." The judge invited Warden to call Case as witness. Warden refused, saying: "The government can call him."

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