Pfeiffer's comments Wednesday came as the huge computer maker said it earned $281 million, or 16 cents a diluted share, in the first quarter, in line with its warning earlier this month of lower-than-expected earnings. In the first quarter last year, when the company was wracked with inventory problems, it had net income of $16 million, or one cent a share. Revenue was $9.42 billion, up 66% from the $5.69 billion in the year-earlier period, before its acquisition of Digital Equipment Corp. However, revenue fell 13% from the fourth quarter's $10.86 billion. In an interview Wednesday with the CNN cable network, Pfeiffer further criticized Compaq's board. "The feedback I've been getting from many, many people is that the Compaq board should hang their heads in shame," he said. "I believe the board contacted thewrong sources" to get information on the company's situation, he continued.

"I also would have expected after the March board meeting that I would have had a chance to present in the April meeting a recovery plan."

Pfeiffer said his boss, company chairman Benjamin M Rosen, a former Wall Street analyst who became a venture capitalist, listens carefully to Wall Street investors. "They are a significant influence on him, based on his past experience," he said. A company spokesman said Rosen had no comment on Pfeiffer's remarks. Pfeiffer insisted he had been on top of the revenue woes, describing tremendous efforts to cope with what he saw as an industry-wide slowing in commercial PC sales. "We made a gigantic attempt to make up for it that went to the last hour of the quarter. And we didn't make it," he said. Pfeiffer, who has been roundly criticized for blaming industry conditions without acknowledging any missteps of his own, stuck to his position despite positive first-quarter reports by industry giantsInternational Business Machines Corp, Microsoft Corp and Intel Corp.

In New York Stock Exchange composite trading, Compaq shares closed up 25 cents at $24.25. Analysts said they were preparing to further reduce their 1999 profit projection of $2 billion, or $1.20 a share, as a result of the uncertainty surrounding the Houston company's plans. "My estimates have to come down. There's no two ways about it," said Ashok Kumar, analyst at US Bancorp Piper Jaffray, who now sees a $1.20-a-share profit. SG Cowen SecuritiesMD Richard Chu said he probably will drop his 1999 earnings estimate to $1.7 billion, or $1 a share. "They're taking the line they're not contemplating a restructuring although, in the same breath, Rosen will hasten to add they're looking at everything," Chu said. Rosen called the management shakeup, in which chief financial officer Earl L Mason also resigned, the result of a combination of things.

IBM net rockets 42 per cent

NEW YORK:
International Business Machines Corp, buoyedby swelling demand for services, software and corporate computers, blew past estimates to report a 42% earnings gain for the first quarter.

IBM was strong across most product lines, but it got a huge boost from an unexpected 17% increase in hardware sales, far surpassing the anemic 2% growth analysts were expecting. The company said it benefitted from strong personal-computer sales, a surprise in the midst of brutal industry-wide competition in which Big Blue had previously been a loser. Industry analysts said the company is stealing market share from rivals including Compaq Computer Corp, especially in the lucrative market for small computer servers.