Compaq Sues Packard Bell for False Advertising.

HOUSTON--(BUSINESS WIRE)--April 10, 1995--Compaq Computer Corporation (NYSE:CPQ) today filed suit alleging that Packard Bell Electronics, Inc. is misleading the public by selling, as new, products that contain used components. The lawsuit claims that Packard Bell fails to disclose to potential purchasers of their products that they may be buying a computer that contains used components.

According to the Complaint, which was filed in Federal District Court in Wilmington, Delaware, Packard Bell disassembles many of its returned products and then uses these parts in the assembly of certain products which are then sold as new.

Corporate Background

Compaq Computer Corporation is the world's largest supplier of personal computers, offering desktop PCs, portable PCs, and servers. Founded in 1982, the company reported 1994 worldwide sales of $10.9 billion. Compaq products are sold and supported in more than 100 countries through a network of more than 38,000 Compaq marketing partners. Compaq also sells directly to customers through Compaq DirectPlus at 1-800-888-5858. Compaq provides 24- hour customer support and can be reached through the Compaq forums on America Online, CompuServe, Internet and Prodigy, or by calling 1-800-345-1518.

Compaq's Return Practices

Compaq has an effective and accurate process to distinguish between used and new computers returned to the company. These returns include unsold inventory from dealers, allegedly defective products, and convenience returns from consumers.

Compaq's process segregates used computers from new in order to ensure that any subsequently refurbished products are clearly sold as such. If Compaq receives a returned computer in an unopened, original box (such as a computer that was not sold by a reseller), Compaq treats the return as new product. However, if the product is returned in an opened box -- as is true in many cases -- Compaq follows a careful and meticulous testing procedure to determine if the computer has, in fact, ever been used.

If visual inspection of the computer reveals prior use, the product will be treated as used, refurbished if possible, and sold with a clear and conspicuous notice on the packaging that the product has been refurbished. If cursory inspection of the product reveals no apparent prior use, trained Compaq technicians run a diagnostic program to determine prior use by one of two indicators: (1) if any operating commands have been issued to the computer's operating system or (2) if any of the software packages have been unbundled. If the results of this diagnostic exercise confirm that the computer has been used, the product will be treated as used and sold as refurbished. If the diagnostic testing reveals no such prior use, the machine will be repaired or upgraded, if necessary, and sold as new.

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Compaq, Presario, Deskpro, Registered U.S. Patent and Trademark Office. ProLinea, LTE and LTE Elite are trademarks of Compaq Computer Corporation. DirectPlus is a service mark of Compaq Computer Corporation. Product names mentioned herein may be trademarks and/or registered trademarks of their respective companies.

CONTACT: Compaq Computer Corporation

Bob Beach, Yvonne Donaldson

713-374-0484

or

Miller Communications

Tony Sapienza, Donna Ruane

617-536-0470