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U.S. Computer Business Grows Again

July 26, 1999

SAN JOSE, Calif (AP) _ Compaq Computer, struggling with executive turmoil and sharp competition, barely held its three-year lead as the top personal computer vendor in the world during the second quarter of 1999, according to market research companies.

``Compaq certainly has some issues. They weren’t really prepared for this whole subsidized free PC marketing blitz that happened,″ said International Data Corp. analyst Christine Arrington in Framingham, Mass.

After leading the industry with inexpensive personal computers in the early 1990s, Compaq’s profits have plunged as competition has flourished in the low-end market, and Internet services are giving away PCs to people who sign up for their services.

The results, released Monday, show that worldwide shipments rose 25.6 million, a 27 percent increase over the same period last year.

Compaq managed to capture 14.6 percent of the worldwide market, but in the U.S. Compaq retained a very narrow lead _ one-third of one percent _ over arch rival Dell Computer Corp.

In the U.S., Dell’s unit volume increased 55 percent as the company expanded. IBM rose to the No. 3 spot in the U.S. reporting 70 percent growth over the same period last year, according to IDC.

Charles Smulders, a senior analyst at Dataquest Inc. in San Jose, said international growth reflected recovering markets in Asia and South America.

``Demand in the Asia-Pacific region was driven by a return in business confidence together with Internet-related consumer PC demand,″ he said. ``The Latin America market also did well as the Brazilian market shows signs of recovering from the exchange rate crisis in January and continued strength in Mexico.″

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