Compaq issues warning in wake of US disaster

But will the HP deal go ahead?

Compaq issued a warning late yesterday that its revenues would be lower than expected - largely due to the after-effects of the terrorist attacks on the US. Chairman and chief executive Michael Capellas said the attacks had affected demand for its products, as well as disrupting the logistics of its supply chain. Demand in Europe and Japan has also weakened substantially, he added. However, Capellas was at great pains to insist that the warning will not put the mockers on its merger plans with HP. Rumours that the deal will be called off have been circulating since Compaq's stock slid well below the HP offer price immediately following the attacks. Compaq now claims its Q3 revenues will be around $7.4bn - a 12 per cent fall on Q2 - and will show an overall loss rather than a profit as analyst forecasts had predicted.