The company reported net income of $92m (£64m), or $0.05 per share, on revenue of $8.5bn (£5.9bn) for the quarter. Excluding a one-off charge for merger-related expenses, Compaq earned $0.06 per share in the quarter ending 31 December 2001.
Although revenue figures showed a sequential boost of about 14% from a dismal third quarter, it was down 26% from the fourth quarter of 2000, the company said.
Earlier this month, Compaq revised its previous, gloomy forecast for the quarter, saying the company would turn a profit on revenue of about $8bn (£5.6bn) after a loss in the third quarter.
For the full year, Compaq reported a net loss of $785m (£547m), compared with a net profit of $569m, for 2000. Revenue dipped 21% to $33.5bn (£23.3bn), from $42.2bn the previous year. Excluding special items, net income for the year was $256m (£178m), or $0.15 per share, the company reported.
The company expects moderate growth over the first half of this year as corporations focus on making their IT infrastructures more secure in the wake of the 11 September attacks, chief executive officer Michael Capellas said. Compaq projects revenues of $7.6bn (£5.2bn) in the first quarter.
Revenue grew more abroad than in the US during the fourth quarter. Compaq recorded a 22% gain outside the US, led by Europe and Latin America. The company expects the European market, which led with 31% revenue growth, to remain stronger than the US in the first quarter, said Peter Blackmore, executive vice-president of sales and services at Compaq.
Results improved in the fourth quarter in the company's enterprise, services and access businesses, Capellas said. The access business includes conventional PCs, Internet access products and technologies, entertainment devices and personal wireless mobility products.
Ongoing declines in PC prices now are being offset somewhat by upward price pressure on some components, including DRAM and flat-panel displays, as well as CD-RW drives, of which there have been some shortages, Compaq officials said.
Capellas voiced continued support for Compaq's proposed merger with Hewlett-Packard, which is expected to go to a shareholder vote in February. "The merger will make the combination an even more strategic partner for its customers," Capellas said.