Price war pays off as Compaq doubles sales

NEW YORK - Compaq Computer emerged as one of the few victors from the price wars raging in the personal computer industry yesterday, reporting sharply higher second-quarter profits on sales that were double their year-ago turnover, writes Larry Black.

The Houston-based manufacturer earned dollars 102m, or dollars 1.21 a share, compared with dollars 29m, or 35 cents a share, for the same period in 1992. Revenues were twice last year's at dollars 1.63bn, while unit shipments were up 150 per cent, reflecting ever-tightening margins in the personal-computer market, as well Compaq's relative success.

Worldwide, PC makers shipped only 25 per cent more computers in the quarter than they did last year, the company said.

Compaq started the price war almost two years ago, aggressively cutting its own production costs in a bid for greater market share. Yesterday it reiterated its goal of becoming the world's Number One PC manufacturer.

'The PC industry continues to be highly competitive, but clearly Compaq's business strategy has positioned the company to be a winner in the current industry consolidation,' Eckhard Pfeiffer, chief executive, said in a statement.