Tokyo, Mar 12: Compaq Computer Corp chief executive officer Eckhard Pfeiffer said that the company was dealing rapidly and proactively with the problems it faced and hoped to return to growth."We're moving on with action that will, if successful, help us to continue our growth," Pfeiffer told a news conference.
Compaq shocked the markets last Friday with the news that its sales for the first quarter to be flat from year ago levels and that the company would only breakeven -- an outlook much worse than what Wall Street had been expecting.
"Compaq has been growing at a unit growth rate of over 40 per cent," Pfeiffer said. "Then we face certain bottlenecks like distribution that may not be growing as fast."
He attributed the abrupt halt in the company's growth this quarter to a drop in demand, declining prices and factors relating to its distribution pipeline through solution channels. He said that Compaq, the world's largest manufacturer of personal computers, would address its problems through measures such as pricing promotions and that it was implementing an inventory model for the company by product category.
"What we've set now is a goal to be fully on the model by mid-year," he said. He did not provide details, however, regarding the company's inventory levels or targets.
Turning to the personal computer market, he said slower growth globally was expected this year than in the past two or three years, while signals for the first quarter were mixed.
"It's very competitive in the US, which is an indicator that there's probably more product pushing in the market than demand is eating up," he said.
He was optimistic, however, about the future.
"Longer term I believe we will see continued growth, probably in the 10 to 20 per cent range," he said.
In Asia excluding Japan, he said, "instead of continued 15 to 20 per cent growth, we're now seeing flat demand if possibly not slightly down." He added similar trends were apparent in Japan.
The future of the market in the region, he said, would depend largely on developments with the Asian financial crisis.
He added that he saw continued good growth in Europe.
Pfeiffer also predicted that Compaq would boost its market share in Japan, the world's second-largest personal computer market.
Despite its status as world leader, Compaq has made little headway in Japan's PC market, where it lags well behind domestic rivals.
Pfeiffer said Compaq's merger last year with Tandem Computers had substantially increased its sales coverage and service and support capabilities in Japan. "All of that will have a positive impact on our market share," he said.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
