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Compaq says storage sales topped expectations

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CIOL Bureau
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SAN FRANCISCO: Compaq Computer Corp. data storage system sales topped

forecasts in the last six months, an executive vice president said, arguing

customers had not abandoned Compaq despite the uncertainty over its plan to

merge with Hewlett-Packard Co.

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Mike Winkler said in an interview that Compaq's sales of data storage devices

were about a third higher than he had expected at the end of last year, with

sales for the six months from September to the middle of March around $900

million.

The bulk of those sales were in the first quarter, which Compaq reports on

April 23, he added. That figure represented a drop from the comparable period a

year earlier, he said, declining to give a figure, but was better than

competitors like EMC Corp. "We are clearly in a share-gaining

position," he said.

Compaq stands to face increased competition from EMC as Dell Computer Corp.,

which took the No. 1 personal computer maker title from Compaq last year, teams

up with Massachusetts-based company.

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Winkler said there was tremendous pricing pressure in the storage industry

but said he did not think customers had waited to place orders at the last

minute, in hopes of negotiating major price breaks, as some technology companies

have suggested.

About 40 percent of technology sales are in the last month of a given

quarter, he said. "I don't think this quarter was any more severe or less

severe," he said, referring to the industry as a whole. Analysts are

scrambling to understand whether corporations are spending technology budgets

frozen for a year during the recent economic downturn.

Winkler also said that Compaq's merger with HP had not scared away customers,

and he argued Compaq would improve its product line if the deal would go

through. Compaq's midrange storage products would complement HP's high-end line

based on hardware from Hitachi Data Systems -- also a supplier to HP rival Sun

Microsystems Inc. -- and HP's OpenView management software, he said.

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