Compaq signs hardware pact with GM

NEW YORK: Compaq Computer Corp. on Monday signed a deal with automaker

General Motors Corp. to provide 100,000 notebook and desktop computers as well

as related services over the next three years.

The contract is worth an estimated $100 million based on average selling

prices and is among one of the largest that Compaq, which is planning to merge

with Hewlett-Packard Co., has signed in the past few months.

The companies did not disclose specific financial terms.

Compaq, which said its sales declined sharply in the third quarter due in

part to its merger, said the agreement shows companies are still confident

Compaq will be able to deliver the technology and services it has promised.

"Because it's for three years, it's also an endorsement not only of

Compaq today, but their confidence in the merged company going forward,"

said Peter Blackmore, executive vice president of sales and services.

"We've got more in the pipeline, so you can see it also clearly shows that

we are focusing on our business even though we are planning a merger,"

Blackmore said.

The deal comes at a time when Compaq's merger with Hewlett- Packard has hit a

stumbling block, with members of both the Hewlett and Packard families saying

that they will vote against the merger.

(C) Reuters Limited.