Who Says P Cs Are Hurting?

Ah, vindication is sweet. On Apr. 24, Compaq Computer shook off worries about a PC market tumble with a blistering 42% jump in revenues and an 8% hike in first-quarter earnings. The results are a major payoff for CEO Eckhard Pfeiffer, who in March gambled on 20% price cuts to lift lagging demand. Compaq shares climbed 3 1/8 on the news, to 47, regaining some of the 10 points they gave up in March on worries about Pfeiffer's strategy.

The results were nothing short of spectacular. Compaq's North American PC sales were 56% higher than the year-ago quarter. That's better than four times the industry's growth rate. Sanford C. Bernstein analyst Vadim Zlotnikov estimates that the gains came mostly at the expense of Hewlett-Packard, a comer in the PC business.

There's more to come. Pfeiffer expects to continue gaining share, projecting that current-quarter revenues will show a 20% increase over last year's sales. And while margins were hurt by price-cutting, he says upcoming introductions of new "server" computers and laptops should beef them up again.