------------------------------------------------
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                   FORM 10-K

               ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                      THE SECURITIES EXCHANGE ACT OF 1934

FOR  THE FISCAL YEAR ENDED DECEMBER 31, 1997     COMMISSION FILE NUMBER 1-9026

                          COMPAQ COMPUTER CORPORATION
            (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                 DELAWARE                            76-0011617
     (STATE  OR  OTHER  JURISDICTION  OF          (I.R.S.  EMPLOYER
     INCORPORATION  OR  ORGANIZATION)            IDENTIFICATION  NO.)

                      20555 SH 249, HOUSTON, TEXAS 77070
                                (281) 370-0670
         (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
            AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

SECURITIES  REGISTERED  PURSUANT  TO  SECTION  12(B)  OF  THE  ACT:

                                           NAME  OF  EACH  EXCHANGE  ON
      TITLE  OF  EACH  CLASS                    WHICH  REGISTERED
      ----------------------                    -----------------
   Common Stock, $.01 par value             New  York  Stock  Exchange
         Debt Securities                               None

SECURITIES  REGISTERED  PURSUANT  TO  SECTION  12(G)  OF  THE  ACT:    None

     Indicate  by  check mark whether the registrant (1) has filed all reports
required  to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934  during  the  preceding  12  months  (or for such shorter period that the
registrant  was  required  to  file such reports), and (2) has been subject to
such  filing  requirements  for  the  past  90  days.    Yes [X]   No [ ].

     Indicate  by  check  mark  if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to  the  best  of  registrant's  knowledge, in definitive proxy or information
statements  incorporated  by  reference  in  Part III of this Form 10-K or any
amendment  to  this  Form  10-K.        [X]

     The  aggregate market value of the voting stock held by non-affiliates of
the  registrant  on  January 30, 1998 (assuming all officers and directors are
affiliates  and based on the last sale price on the New York Stock Exchange as
of  such  date)  was  approximately  $45  billion.

     The  number  of  shares of the registrant's Common Stock, $.01 par value,
outstanding  as  of  January  30,  1998,  was  approximately  1.5  billion.

                      DOCUMENTS INCORPORATED BY REFERENCE

     There is incorporated by reference in Part II and Part III of this Annual
Report  on  Form 10-K certain of the information contained in the registrant's
proxy  statement  for  its annual meeting of stockholders to be held April 23,
1998, which will be filed by the registrant within 120 days after December 31,
1997.
               ------------------------------------------------
<PAGE>

PART  I

ITEM  1.    BUSINESS

GENERAL

     Founded  in  1982, Compaq Computer Corporation is a worldwide information
technology  company  and is the largest global supplier of personal computers.
Compaq  develops  and  markets  hardware,  software,  solutions  and services,
including  industry-leading  enterprise  computing  solutions,  fault-tolerant
business-critical solutions, networking and communication products, commercial
desktop  and  portable products and consumer PCs. Compaq products are sold and
supported  in  more  than 100 countries through a network of authorized Compaq
marketing  partners.  Compaq markets its products primarily to business, home,
government,  and  education customers. References to the "Company" mean Compaq
Computer  Corporation  and  its  subsidiaries.

     Compaq  reinforced  its  position  as  the  largest  supplier of personal
computers  in  the  world  in  1997.    It  increased  its market share of the
expanding  worldwide  PC market from approximately 10% to approximately 12% by
focusing  its  business  activities  on expanding sales to new customers while
augmenting sales to its existing customer base.  In April 1997, Compaq shipped
its  30  millionth  PC.  Business customers account for the largest portion of
Compaq's  sales.  Business  customers are attracted to Compaq's products for a
variety  of  reasons,  including  Compaq's  reputation for reliability, price,
product  performance  and technological excellence, the availability of a wide
variety  of  application  software  products,  ease  of  use  and connectivity
solutions.

     In  1997, Compaq maintained its world leadership position in servers with
an  approximate  30%  worldwide market share.  Over the last few years, Compaq
has  expanded  its  servers  to  new levels of high-range class functionality,
availability,  fault  tolerance  and  manageability  for  both  mainstream and
mission-critical  applications.

     In  addition, as presented more fully below, Compaq became the number one
Windows  NT-based  workstation  vendor  in  1997,  less  than  one  year after
introducing  its  first  product.  Also in 1997, and for the third consecutive
year,  Compaq  maintained  and increased its number one worldwide market share
position  in  the  shipment  of  branded  computer  monitors.

     In the future, Compaq will continue to integrate hardware and software to
furnish  the  building  blocks  of  personal  and  corporate  computing  while
participating  in  software  and  communications  markets  either  directly or
through business alliances.  Through this strategy, Compaq expects to become a
leading  provider  of  enterprise-wide  solutions  for  business  as  well  as
information appliances for the home by offering the products and services that
customers  need  to easily access and manage information.  Compaq believes its
key  to  success  is leveraging Compaq's marketing skills, engineering talent,
purchasing power, manufacturing capabilities, distribution strengths and brand
name  to  bring to market high-quality, cost-competitive products in different
price  ranges  with  features  that  appeal  to  a  wide variety of customers.

PENDING    AND  RECENT  ACQUISITIONS

     On  January  26,  1998, Compaq announced the execution of an agreement to
acquire  Digital  Equipment  Corporation  ("Digital").  Under the terms of the
transaction, shareholders of Digital will receive $30 in cash and 0.945 shares
of  Compaq  common  stock  for each share of Digital common stock. Compaq will
issue approximately 150 million shares of Compaq common stock and $4.8 billion
in  cash.  This transaction will be accounted for as a purchase. It is subject
to the approval of Digital's shareholders as well as clearance under antitrust
laws  and  other customary closing conditions, and is expected to be completed
in  the  second  quarter  of  1998.
<PAGE>

     In  August  1997,  Compaq  merged  with  Tandem  Computers  Incorporated
("Tandem")  in  a  stock-for-stock  transaction  accounted for as a pooling of
interests.    Tandem  provides  its  customers  with  reliable,  scaleable,
fault-tolerant  enterprise  computer  systems and client/server solutions.  In
connection  with the merger, Compaq issued approximately 126 million shares of
Compaq  common  stock,  based  upon an exchange ratio of 1.05 shares of Compaq
common  stock  for  each  share  of  Tandem  common  stock.

In  May  1997,  Compaq  completed  a  cash  tender  offer  for  Microcom, Inc.
("Microcom"),  a manufacturer of remote access technologies and solutions, for
$288  million.

COMPAQ  PRODUCTS

     Compaq's  products  are  available  with a broad variety of functions and
features  designed to accommodate a wide range of user needs.  Compaq operates
through  five customer-focused, global product groups: PC Products, Enterprise
Computing,  Consumer Products, Communication Products and Tandem Computers, as
well  as a worldwide sales, marketing, service and support organization.  This
structure  allows  Compaq  to  focus on sales, marketing, brand management and
service  and  support  on  a  global  level.

     PC  Products  Group.    The PC Products Group accounted for 47% of Compaq
sales  in  1997.   The Compaq Deskpro was again the world's most popular PC in
1997,  while  Compaq  monitors  were  the  number  one  leader  worldwide.

     Compaq also introduced a new broad range of portable computers, including
the  Armada  1500  family,  a fully-integrated value line, and the Armada 7700
family,  with  one  of  the highest performance and most advanced technologies
available.

     Demonstrating  our  ongoing  commitment  to  innovation, Compaq delivered
products  in  1997  that used the latest technologies, like the Deskpro 4000N,
one  of  the  first  Net  PCs on the market, and the Deskpro 4000S, with a new
smaller desktop form factor.  Taking a lead in the industry, Compaq introduced
several  new  technologies,  such  as  Intel's Pentium and Pentium II with MMX
technology,  new  graphics capabilities, enhanced Intelligent Manageability, a
flat panel monitor and a suite of products and services tailored for the small
and  medium business market.  As we look to 1998, Compaq plans to continue its
leadership role with products that address new technologies, high performance,
competitive  price  points,  and  new  markets.

     Enterprise  Computing Group.  The Enterprise Computing Group had sales of
server  products, professional workstations and enterprise storage and options
that  accounted  for 36% of Compaq's sales in 1997 (including Tandem's sales).
Compaq's  servers  range  from  the  aggressively  priced ProSignia 200 to the
high-availability  ProLiant  7000  with  PCI  Hot  Plug technology, capable of
powering  the  most  demanding business-critical environments. As evidenced by
our  approximately 30% server market share, Compaq's powerful server platforms
deliver industry-leading price performance coupled with partner-based software
solutions to give customers tightly integrated, reliable solutions that reduce
cost,  deployment  time  and risk. Compaq currently is the leading provider of
key  NT  solutions.    In  1997,  Compaq  became  the second largest vendor of
multi-user  storage  systems  and  expanded its product offering of enterprise
class  storage,  backup  and  options  to  over  600  models. In addition, the
workstation business, which was launched less than 18 months ago, grew rapidly
by  broadening  its  product  line,  forging  additional  partnerships  with
application  vendors  and  entering new vertical markets to achieve the number
one  share position in the third quarter of 1997 in the Windows NT workstation
market.
<PAGE>

     In  1998,  the Enterprise Computing Group plans to further strengthen its
leadership  in  the  mainstream  server,  options, and workstation markets and
aggressively  expand  platform  offerings  and  presence  in  the  distributed
enterprise  market.  The new E2000 Platform Architecture will enable powerful,
flexible,  and  cost-effective  solutions  to meet today's enterprise needs by
utilizing  standards-based components like high availability ProLiant servers,
fibre  channel-based  storage,  and  scalable  ServerNet Systems Area Networks
(SAN)  interconnects.

     To provide enterprise customers more complete solutions to their business
problems  and  to  take  advantage of the significant growth in shrink-wrapped
enterprise  applications,  we  are  broadening our partnerships and developing
better  tools  and  methodologies  for  delivering  value-added  solutions and
services  to  our customers and solutions partners.  The integration of Tandem
will  further  strengthen  our  solution  offerings  for  the  retail,
telecommunication  and  finance segments, as well as broaden Compaq's Decision
Support  Services  (DSS)  and  E-commerce  solutions.    We  will build on our
leadership  position  in  storage by offering our customers new Fibre Channel,
DLT  library  and  Enterprise  storage solutions that will allow them to build
highly  available,  scalable  storage networks.  In workstations, we expect to
expand  our  segment  solutions as well as introduce new products offering the
latest  graphic  and  high-performance  computing  technologies.

     Consumer  Products  Group.    In 1997, the Consumer Products Group, which
markets  computers  and  related options aimed at the consumer and home office
market,  accounted  for 16% of Compaq's sales.  In 1997, Compaq introduced its
spring  lineup  of home multimedia PCs that included the Presario 2000 series,
the  first series of products in the market to combine leading-edge technology
at  prices  below  $1000.   In June, Compaq expanded its consumer line in many
significant  ways,  incorporating  the  latest processor technologies with new
low-cost  form  factors,  easy  internet  access  capabilities,  DVD-ROM
capabilities,  and a creativity imaging center that supports video and digital
image  capture,  editing  and communications. Compaq also expanded its line of
home  notebook  PCs with the latest processor and screen technologies enhanced
with  multimedia  applications  and  consumer-oriented  CD  playback features,
marketed  as  DisqPlay.   The combination of innovative portables and low cost
high  technology  desktop  products  resulted in Compaq's number one worldwide
consumer  market  share  position  in  the  third  quarter  of  1997.

     Tandem Computers.  Compaq's merger with California-based Tandem Computers
in  August  1997  extended  the reach of its enterprise products and solutions
into the mission-critical computing space.  Well-known for the reliability and
scalability  of  its  systems,  Tandem provides valuable expertise in advanced
clustering  technology,  service,  and support to Compaq.  During 1997, Tandem
released  its  ServerNet  technology-based  NonStop Himalaya S-series range of
systems,  demonstrated the enterprise-class capability of clustered Windows NT
servers  with  a  2-terabyte decision support system running NonStop Software,
and  continued  to enhance its telecommunications-focused UNIX system products
and  leading  wireless  applications.

     In  1998,  Tandem  will  focus  on  delivering targeted solutions for key
vertical markets, as well as high-end horizontal solutions in decision support
and  electronic commerce, in accordance with the joint strategy developed with
the  Enterprise  Computing  Group.
<PAGE>

     Communication  Products  Group.  Compaq  has  a  broad line of local area
network  (LAN)  and  remote  access products. The LAN product line consists of
network  interface  cards,  hubs and switches to provide a range of scaleable,
network  solutions  for small-to-medium businesses and work groups/departments
in  large  corporations.  During  1997,  Compaq  introduced  multiple  new LAN
products  including  enhanced 10/100 Ethernet and Token Ring network interface
cards;  an  industry  first-of-its kind, port-level, auto-sensing, dual-speed,
stackable  10/100  Ethernet  hub;  and,  three  cost  effective  10 and 10/100
Ethernet  switches.

     Remote  access  products  include modems, an ISDN router, modem pools and
remote  access  concentrators.  Recently  introduced  remote  access  products
include  new  K56flex  protocol  modems  and  a small-office-home-office, ISDN
router  with  an  integrated  8  port Ethernet hub ("network in a box"). Modem
pools  and  remote  access  concentrators  were added to the portfolio through
Compaq's 1997 acquisition of Microcom.  Compaq's remote access solutions scale
from  small  businesses  to  large  enterprises and telecom service providers.

PRODUCT  DEVELOPMENT

     Compaq  is  actively  engaged in the design and development of additional
products  and  enhancements  to  its  existing products. During 1997, 1996 and
1995,  Compaq  expended  $817  million,  $695  million  and  $552  million,
respectively,  on  research  and  development.  In addition, Compaq spent $208
million  and $241 million on in-process research and development in connection
with  acquisitions  in  1997  and 1995, respectively.  Since personal computer
technology  develops  rapidly,  Compaq's continued success is dependent on the
timely  introduction  of  new products with the right price and features.  Its
engineering  effort focuses on new and emerging technologies as well as design
features  that  will  increase  manufacturing  efficiency and lower production
costs.    In  1997,  Compaq  focused  significant  attention  on technological
developments  for  enterprise  computing,  high-availability  and  failover
solutions,  storage technology, enterprise systems management, integration and
configuration  optimization,  internet  and  intranet technologies, as well as
networking  and  communications products. In the portable area, Compaq focused
on  developing  leading  solutions  for  high  performance desktop replacement
users,  including  integrated  high  performance  notebooks.

     Compaq's  product  development  efforts  are  centered  on  aggressively
developing  new  areas  in which Compaq can differentiate its products and add
value,  focusing  on innovative platform features, the integration of hardware
and  software,  and  new  related  products  and  services.   Because Compaq's
business  now  intersects with a number of areas in which other companies have
significantly  greater  technological, marketing and service expertise, Compaq
has  focused  on alliances with third parties that have complementary products
and  skills  as  well  as  acquisitions  that  target  incremental  business
opportunities.

MANUFACTURING  AND  MATERIALS

     Compaq's  PC  manufacturing  operations consist of manufacturing finished
products  and  various  circuit  boards from components and subassemblies that
Compaq acquires from a wide range of vendors. Certain of Compaq's products are
manufactured  by  third  party  original  equipment  manufacturers.

     Compaq  is in the process of developing the capacity to build products to
order  ("BTO") and configure products to order ("CTO").  This approach entails
manufacturing  products  upon receipt of a sales order, as opposed to building
to  stock  or  sales  forecast.    BTO  capabilities  are employed to maximize
manufacturing  efficiencies  by  producing  high  volumes  of  basic  product
configurations.  CTO permits configuration of units to the particular hardware
and  software  customization  requirements of certain customers.  Both BTO and
CTO  are  designed  to  generate  cost  efficiencies  relating to just-in-time
manufacturing,  inventory  management  and  distribution  practices.
<PAGE>

     Compaq  believes  that  there is a sufficient number of competent vendors
for  most  components  and  subassemblies. A significant number of components,
however,  is  purchased  from  single sources due to technology, availability,
price,  quality  or  other  considerations.  Order lead times and cancellation
requirements  vary  by  supplier  and component.  Key components and processes
currently  obtained  from single sources include certain of Compaq's displays,
operating  systems,  microprocessors, application-specific integrated circuits
and  other  custom chips and certain processes relating to construction of the
housing  for  Compaq's  computers.    In  addition, new products introduced by
Compaq often initially utilize custom components obtained from only one source
until  Compaq  has evaluated whether there is a need for additional suppliers.

     Like  other  participants  in  the  personal  computer  industry,  Compaq
ordinarily acquires materials and components through purchase orders typically
covering Compaq's requirements for periods averaging 90 to 120 days. From time
to  time  Compaq  has  experienced  significant  price  increases  and limited
availability  of  certain components that are available from multiple sources.
At  times Compaq has been constrained by parts availability in meeting product
orders  and  future  constraints  could  have  an  adverse  effect on Compaq's
operating  results.  On  occasion,  Compaq  acquires  component  inventory  in
anticipation  of  supply  constraints. A restoration of component availability
and resulting decline in component pricing more quickly than anticipated could
have  an  adverse  effect  on  Compaq's  operating  results.

MARKETING  AND  DISTRIBUTION

     Compaq  distributes its products principally through third-party computer
resellers.  Compaq's  products are sold to large and medium-sized business and
government  customers  primarily  through  dealers,  value-added resellers and
systems  integrators  and  to  small  business  and home customers principally
through  dealers  and  consumer  channels.  In  response  to changing industry
practices  and  customer  preferences,  Compaq  is continuing its expansion of
distribution  establishments.  Compaq also sells products directly through its
sales force and directly to small business and home customers through Compaq's
Internet web page at www.compaq.com and its mail order business that feature a
                     --------------
variety  of  personal  computers,  printers  and  software  products.

     In 1997, North American sales constituted 55% of Compaq's total sales and
Europe,  Middle  East and Africa sales constituted 32%. Compaq's North America
Division  markets its products in the United States and Canada, while Compaq's
Europe,  Middle East and Africa Division, based in Munich, Germany, focuses on
opportunities in Europe as well as in parts of Africa and the Middle East. The
sales  of  Compaq's  Asia/Pacific,  Japan,  Greater  China  and  Latin America
Divisions, which focus on opportunities in these high growth areas, constitute
the  remaining  13% of Compaq's total sales. Compaq's products are now sold by
dealers  in  more  than  100 countries. For further geographic information for
1997,  1996  and  1995,  see Management's Discussion and Analysis of Financial
Condition  and  Results  of Operations and Note 9 of the Notes to Consolidated
Financial  Statements.

     In 1997, Compaq created a leasing company, Compaq Capital Corporation, to
provide  financing  to  facilitate and enhance the sale of Compaq products and
services  on  a  worldwide  basis.  Compaq  Capital  has  been  staffed  with
experienced  leasing/financing  specialists who are moving rapidly to create a
worldwide  leasing/financing  network  through  de  novo  operations and joint
venture  relationships  with  other  lessors. On July 10, 1997, Compaq Capital
commenced  leasing  operations in North America and on October 1, 1997, Compaq
Capital  implemented  leasing operations in Europe.  Additional Compaq Capital
leasing  operations  are  scheduled  to  be rolled out to the Asia/Pacific and
Latin  America  regions  in  1998.  It  is  anticipated  that Compaq Capital's
dedicated leasing/financing operations will provide additional capabilities to
help  meet  customer  needs  on  a  global  basis.
<PAGE>

SERVICE  AND  SUPPORT

     Compaq  provides support and warranty repair to its customers principally
through  full-service  computer  dealers  and  independent third-party service
companies.  Compaq offers its customers CompaqCare, which includes a number of
customer service and support programs, most notably one- to three-year limited
warranties on PC products and in the U.S., round-the-clock telephone technical
support  for  Compaq  hardware  products.

PATENTS,  TRADEMARKS,  AND  LICENSES

     Compaq and its subsidiaries held 910 patents, had 139 patents allowed and
awaiting  issuance  and  had  1090 patent applications pending with the United
States  Patent  and  Trademark Office at the close of 1997, as well as related
international  patents  and  patent  applications.  In  addition,  Compaq  has
registered  certain trademarks in the United States and in a number of foreign
countries. While Compaq believes that patent and trademark protection plays an
important part in its business, Compaq relies primarily upon the technological
expertise,  innovative  talent  and  marketing  abilities  of  its  employees.

     Compaq has from time to time entered into cross-licensing agreements with
other  companies  holding  patents  to technology used in Compaq's products as
well  as  with  companies  using  patents to technology held by Compaq. Compaq
holds  a  license from IBM for all patents issuing on applications filed prior
to  July  1,  1993, and has entered into a patent cross-license agreement with
Texas  Instruments,  Inc., for all patents issuing on applications filed prior
to  December  31,  2005. In January 1996, Compaq and Intel Corporation entered
into  a  ten-year  patent  cross-license  agreement.

SEASONALITY

     General  economic  conditions  have  an  impact  on Compaq's business and
financial  results.   From time to time, the markets in which Compaq sells its
products experience weak economic conditions that may negatively affect sales.
Although  Compaq  does not consider its business to be highly seasonal, Compaq
in general experiences seasonally higher sales and earnings in the second half
of  the  year.  Should  Compaq's  retail business expand relative to its other
businesses,  Compaq  could  experience  an  increase in the seasonality of its
business  and financial results could become more dependent on retail business
fluctuations.

CUSTOMERS

     One customer accounted for 11% of sales for 1997.  During this period, no
other customer of Compaq accounted for 10% or more of sales. In 1997, Compaq's
five  largest  resellers represented approximately 25% of Compaq's 1997 sales.

BACKLOG

     Compaq's  resellers typically purchase products on an as-needed basis and
resellers  frequently  change  delivery schedules and order rates depending on
market conditions. Unfilled orders can be, and often are, canceled at will and
without  penalties.  In  Compaq's  experience,  however,  the actual amount of
unfilled  orders  at any particular time is not a meaningful indication of its
future  business  prospects  since  orders  rapidly become balanced as soon as
supply  begins  meeting  demand.    Forecasting  demand  for  newly introduced
products is complicated by the availability of different product models, which
may  include  various  types  of  built-in  peripherals  and software, and the
configuration requirements, such as language localization, in certain markets.
As a result, while overall demand may be in line with Compaq's projections and
manufacturing  implementation, local market variations can lead to differences
between  expected  and actual demand and resulting delays in shipment.  Should
Compaq  be  unable to meet demand for its products on a timely basis, customer
satisfaction  and  sales  could  be  adversely  affected.
<PAGE>

COMPETITION

     The  computer  industry is intensely competitive with many U.S., Japanese
and other international companies vying for market share. The market continues
to  be  characterized  by  rapid  technological  advances in both hardware and
software  developments  that have substantially increased the capabilities and
applications  of  information  management  products  and  have resulted in the
frequent  introduction  of new products. The principal elements of competition
are  price,  product performance, product quality and reliability, service and
support, marketing and distribution capability and corporate reputation. While
Compaq  believes  that  its  products compete favorably based on each of these
elements,  Compaq  could  be  adversely  affected if its competitors introduce
innovative  or  technologically  superior  products or offer their products at
significantly  lower  prices  than  Compaq.  Compaq's  results  could  also be
adversely  affected  should  it  be  unable  to  implement  effectively  its
technological and marketing alliances with other companies, such as Microsoft,
Intel,  Novell, Oracle, SAP and Texas Instruments, among others, and to manage
the  competitive  risks  associated  with  these  relationships.

ENVIRONMENTAL  LAWS  AND  REGULATIONS

     Compaq  recognizes that operating in a manner that is compatible with the
environment  is  good  for  its  community, employees, customers and business.
Compaq  integrates  numerous  environmental features in the product design and
manufacturing  process  that  reduce the potential environmental impact during
the  lifecycle  of its products and its products are designed and manufactured
to  meet  a  variety  of the world's environmental standards and expectations.
Compaq  uses  no  chlorofluorocarbons  (CFCs)  in  its worldwide manufacturing
operations  and  undertakes  ongoing  environmental  programs, including waste
reduction,  energy  conservation, recycling and design for environment. Compaq
maintains a worldwide environmental health and safety audit program. The audit
program includes management system and compliance evaluations. Compliance with
laws  enacted  for  protection  of the environment to date has had no material
effect  upon  Compaq's capital expenditures, earnings or competitive position.
Although Compaq does not anticipate any material adverse effects in the future
based  on  the  nature of its operations and the purpose of environmental laws
and  regulations, there can be no assurance that such laws or future laws will
not  have  a  material  adverse  effect  on  Compaq.

YEAR  2000  TRANSITION

     The  media has given much attention to the Year 2000 transition, focusing
primarily  on  the  ability  of  older, proprietary mainframe and minicomputer
systems  and  their software to handle the transition.  New, open systems like
those  sold  and  used by Compaq also face associated issues.  In 1997, Compaq
established  a task force to address its PC product and customer concerns, and
a  separate  task  force  to address Compaq's internal information systems and
those  of  its  suppliers.    A third task force addresses all such issues for
Tandem  products.
<PAGE>

     Compaq  announced a Year 2000 product readiness program for its PC system
products on October 7, 1997.  Compaq systems covered by the program sold on or
after that date pass the NSTL YMARK2000 test for Year 2000 hardware readiness.
NSTL,  a  division  of  the McGraw Hill Companies, uses a strict definition of
Year  2000  readiness for x86-based PCs. The hardware clock must be compatible
to  the  Motorola  MC146818 real-time clock (RTC) and the BIOS must report the
occurrence  of  the  Year  2000  in  real  time and recognize leap years, when
appropriate,  for  the  Years 2000 through 2009 inclusive.  Compaq implemented
firmware  changes  to enable its new systems to pass the test. Systems sold by
Compaq prior to October 7, 1997 may require firmware updates to pass the test.
Older  systems  sold  by Compaq may not have upgradeable firmware and thus may
not be able to pass the test.  Compaq continues to evaluate testing techniques
for its software and options.  Additional information is available on Compaq's
Web  site  at  www.compaq.com/year2000.
               -----------------------

A  second  Year  2000 product readiness program covers Tandem products. Compaq
defines  Year  2000  compliance  for  Tandem  products as "the capability of a
product,  when  used  in  accordance  with  its  associated  documentation, to
correctly  receive, process, and provide date data within and between the 20th
and  21st  centuries, provided that all other products (for example, hardware,
software,  and firmware) used with the product properly exchange accurate date
data  with  the  product."    New  Tandem products meet this definition. Older
systems sold by Tandem may not be capable of meeting this definition.  Testing
of  new  and older systems is ongoing.  Additional information is available on
Tandem's  Web  site  at  www.tandem.com.
                         --------------

     For  additional information, see "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Factors That May Affect Future
Results  -  Year  2000  Compliance."

EMPLOYEES

     At  December  31, 1997, Compaq had approximately 32,565 full-time regular
employees  and  8,878  temporary and contract workers engaged in manufacturing
operations,  engineering,  research and development, marketing, sales, service
and administrative activities. Compaq believes that its ability to attract and
retain  skilled  personnel  appropriately  is  critical  to  its  success.
Accordingly,  Compaq  has  developed  competitive  human  resources  policies
consistent  with  its  business  plan.

ITEM  2.    PROPERTIES

     Compaq's principal administrative facilities and a manufacturing facility
are  located  in  Houston,  Texas, on the 1,000-acre Compaq Center in Houston.
Tandem's  administrative facilities are located in Cupertino, California and a
principal  manufacturing  site is in Fremont, California.  Compaq leases sales
offices  in  101 cities in the United States as well as certain administrative
and  warehouse  facilities.  Compaq leases a manufacturing facility in Irving,
Texas,  that  is  used in the manufacture of hubs and high speed switches.  In
addition,  Compaq  leases  customer  service call centers in Atlanta, Georgia;
Houston,  Texas;  and  Dublin,  Ireland.    Compaq  also  owns  or  leases
administrative  and    sales    offices    and    manufacturing  facilities
internationally  and  has its principal international manufacturing facilities
in  Scotland,  Singapore,  Brazil,  Australia  and  China.

ITEM  3.    LEGAL  PROCEEDINGS

     Compaq  is  subject  to  legal  proceedings  and claims that arise in the
ordinary course of its business.  Management does not believe that the outcome
of  any  of  those  matters  will  have  a material adverse effect on Compaq's
financial  condition,  results  of  operations  or  cash  flows.
<PAGE>

ITEM  4.    SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITIES  HOLDERS

     There  were no matters submitted to a vote of security holders during the
fourth  quarter  of  1997.


PART  II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

MARKET  FOR  COMMON  STOCK.    Compaq's common stock is listed on the New York
Stock  Exchange  and  trades  under  the  symbol CPQ.  As of January 30, 1998,
Compaq  had approximately 23,000 shareholders of record. The reported high and
low  closing stock prices, as reported on the NYSE Composite Transaction Tape,
were  as  follows:

<TABLE>
<CAPTION>
                  1997            1996
===========================================
              High    Low     High    Low
             --------------  --------------
<S>          <C>     <C>     <C>     <C>
1st Quarter  $17.35  $14.40  $10.60  $ 7.30
2nd Quarter   21.63   14.40    9.95    7.53
3rd Quarter   39.13   20.38   12.95    8.30
4th Quarter   38.63   26.66   17.15   12.88
</TABLE>

DIVIDENDS  AND  DIRECT  STOCK  PURCHASE PLAN.  Compaq paid its first quarterly
dividend  of $ 0.015 per share to shareholders of record on December 31, 1997.
Compaq  anticipates  that the cash dividend will be paid on a quarterly basis.
Compaq has established a direct stock purchase plan through which stockholders
may  reinvest their dividends and invest additional amounts directly in Compaq
common  stock.  Additional information about the direct stock purchase plan is
available  at  www.compaq.com/corporate/ir/shareplan.html.
               ------------------------------------------
<PAGE>

ITEM  6.    SELECTED  CONSOLIDATED  FINANCIAL  DATA

     The  following  income statement and balance sheet data have been derived
from  consolidated  financial  statements  that  have  been  audited  by Price
Waterhouse  LLP, independent accounts.  The information set forth below is not
necessarily  indicative of the results of future operations and should be read
in  conjunction  with  the consolidated financial statements and notes thereto
appearing  elsewhere  in  this  Form  10-K.

<TABLE>
<CAPTION>

Year ended December 31, In millions except per share amounts     1997     1996     1995     1994     1993
==========================================================================================================
<S>                                                            <C>       <C>      <C>      <C>      <C>
STATEMENT OF INCOME
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $24,584   $20,009  $16,675  $12,605  $8,873
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . .   17,833    14,855   12,291    8,885   6,188
                                                               --------  -------  -------  -------  ------
                                                                 6,751     5,154    4,384    3,720   2,685
                                                               --------  -------  -------  -------  ------
Selling, general and administrative expense . . . . . . . . .    2,947     2,507    2,186    1,859   1,549
Research and development costs. . . . . . . . . . . . . . . .      817       695      552      458     436
Purchased in-process technology(1). . . . . . . . . . . . . .      208         -      241        -       -
Restructuring charge(2) . . . . . . . . . . . . . . . . . . .        -        52        -        -     270
Merger-related costs. . . . . . . . . . . . . . . . . . . . .       44         -        -        -       -
Other income and expense, net(3). . . . . . . . . . . . . . .      (23)       17       79       50     269
                                                               --------  -------  -------  -------  ------
                                                                 3,993     3,271    3,058    2,367   2,524
                                                               --------  -------  -------  -------  ------
Income before provision for income taxes. . . . . . . . . . .    2,758     1,883    1,326    1,353     161
Provision for income taxes. . . . . . . . . . . . . . . . . .      903       565      433      365     142
                                                               --------  -------  -------  -------  ------
Net income. . . . . . . . . . . . . . . . . . . . . . . . . .  $ 1,855   $ 1,318  $   893  $   988  $   19
                                                               ========  =======  =======  =======  ======
Earnings per common share:(4)(5)
  Basic . . . . . . . . . . . . . . . . . . . . . . . . . . .  $  1.23   $  0.90  $  0.62  $  0.70  $ 0.01
                                                               ========  =======  =======  =======  ======
  Diluted . . . . . . . . . . . . . . . . . . . . . . . . . .  $  1.19   $  0.87  $  0.60  $  0.68  $ 0.01
                                                               ========  =======  =======  =======  ======
Shares used in computing earnings per
  common share: (4)(5)
  Basic . . . . . . . . . . . . . . . . . . . . . . . . . . .    1,505     1,472    1,442    1,405   1,348
                                                               ========  =======  =======  =======  ======
  Diluted . . . . . . . . . . . . . . . . . . . . . . . . . .    1,564     1,516    1,492    1,463   1,388
                                                               ========  =======  =======  =======  ======

FINANCIAL POSITION
Current assets. . . . . . . . . . . . . . . . . . . . . . . .  $12,017   $10,089  $ 7,462  $ 6,037  $4,142
Total assets. . . . . . . . . . . . . . . . . . . . . . . . .   14,631    12,331    9,637    7,862   5,752
Current liabilities . . . . . . . . . . . . . . . . . . . . .    5,202     4,741    3,356    2,739   2,098
Long-term debt. . . . . . . . . . . . . . . . . . . . . . . .        -       300      300      300       -
Stockholders' equity. . . . . . . . . . . . . . . . . . . . .    9,429     7,290    5,757    4,644   3,468
<FN>
(1)  Represents  a  $208 million and a $241 million non-recurring, non-tax-deductible charge for purchased
in-process  technology  in  connection  with  acquisitions  in  1997  and  1995,  respectively.
(2)  Includes  a  restructuring  charge  of  $52  million  in  1996  and  $258 million in 1993 for Tandem.
(3)  1993  amount  includes  Tandem  loss  from  discontinued  operations  of  $222  million.
(4)  All  common share and per common share data reflect the five-for-two stock split in July 1997 and the
two-for-one  stock  split  in  January  1998.
(5)  The  Company  adopted  FAS  128  in  1997.  All prior period earnings per common share data have been
restated  to  conform  to  the  provisions  of  this  statement.
</TABLE>


ITEM  7.    MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF FINANCIAL CONDITION AND
RESULTS  OF  OPERATIONS

     The  following  discussion  should  be  read  in  conjunction  with  the
consolidated  financial  statements.  Except  as  specifically  indicated, the
forward-looking  statements  contained  in  this  discussion  do not take into
consideration the impact of Compaq's agreement to merge with Digital Equipment
Corporation  as  described  in  Item  1,  which  is subject to the approval of
Digital's  shareholders as well as certain regulatory approvals.  We expect to
consummate  the  merger  in  the  second  quarter  of  1998.
<PAGE>

RESULTS  OF  OPERATIONS

     The  following  table  presents,  as  a  percentage  of  sales,  selected
consolidated  financial  data  for each of the three years in the period ended
December  31.

<TABLE>
<CAPTION>
Year ended December 31,                        1997    1996    1995
====================================================================
<S>                                           <C>     <C>     <C>
Sales. . . . . . . . . . . . . . . . . . . .  100.0%  100.0%  100.0%
Cost of sales. . . . . . . . . . . . . . . .   72.5    74.2    73.7 
                                              ------  ------  ------
Gross margin . . . . . . . . . . . . . . . .   27.5    25.8    26.3 
                                              ------  ------  ------

Selling, general and administrative expense.   12.0    12.5    13.1 
Research and development costs . . . . . . .    3.3     3.5     3.3 
Purchased in-process technology(1) . . . . .    0.9       -     1.4 
Restructuring charge(2). . . . . . . . . . .      -     0.3       - 
Merger-related costs(3). . . . . . . . . . .    0.2       -       - 
Other income and expense, net. . . . . . . .   (0.1)    0.1     0.5 
                                              ------  ------  ------
                                               16.3    16.4    18.3 
                                              ------  ------  ------

Income before provision for income taxes . .   11.2%    9.4%    8.0%
                                              ======  ======  ======
<FN>
(1)  Represents  a  $208  million  and  a  $241  million  non-recurring,
non-tax-deductible  charge  for  purchased in-process technology in connection
with  acquisitions  in  1997  and  1995,  respectively.
(2)  Represents a $52 million charge related to restructuring actions taken by
Tandem  during  1996.
(3)  Represents a $44 million non-recurring, non-tax-deductible charge related
to  costs  associated  with  the  Tandem  merger  during  1997.
</TABLE>


SALES

     Sales for 1997 increased approximately $4.6 billion or 23% over the prior
year  as  compared with an increase of $3.3 billion or 20% during 1996.  North
American sales, which include Canada, increased 26% during 1997, compared with
an  increase  of  29%  during  1996.    International sales, excluding Canada,
represented 45% of total sales in 1997 as compared with 47% in 1996.  European
sales  increased  21%  during 1997 compared to an increase of 10% during 1996.
Other international sales increased 15% during 1997, compared with an increase
of  14%  during  1996.  Other international markets experienced adverse market
conditions  in  1997.  In  particular,  the weakness in the Asian and Japanese
markets  resulted  in  an  aggressive  pricing  environment  throughout  1997.

     The  personal  computer  industry  is  highly  competitive  and marked by
frequent  product  introductions,  continual  improvement  in  product
price/performance  characteristics  and  a  large  number  of  competitors.
Approximately  58%  of  Compaq's  CPU sales in 1997 were derived from products
introduced  in  1997.    These  new products have been designed to allow us to
achieve  low  product  costs while maintaining the quality and reliability for
which  our products have been known, thereby increasing our ability to compete
on  price  and  value.

     The  significant  increase  in  sales  in  1997 stemmed primarily from an
increase  in  the  number  of  units  sold and an increase in sales of options
associated with CPU products. In 1997, Compaq's worldwide unit sales increased
43%  while  they  increased  23%  in  1996.   The 1997 increase included a 35%
expansion  in  unit  sales  of  commercial  CPU  products,  a 62% increase for
consumer  CPU  products  and  a  65%  increase  for  enterprise  CPU products.
According to third-party estimates, worldwide unit sales of personal computers
increased  approximately  15%  to  16%  in  1997,  in contrast to a 16% to 18%
increase  in  1996.    Competition  continues  to have a significant impact on
prices  of  our  products,  especially those aimed at the consumer market, and
additional pricing actions may occur as we attempt to maintain our competitive
mix of price/performance characteristics. We attempt to mitigate the effect of
any  pricing  actions  through  implementation  of  design-to-cost  goals, the
aggressive  pursuit of reduced component costs, manufacturing efficiencies and
control  of  operating  expenses.
<PAGE>

GROSS  MARGIN

     Gross margin as a percentage of sales was 27.5% in 1997, up from 25.8% in
1996.   The increase in gross margins primarily resulted from a higher portion
of  sales  of  enterprise  products and options, production and logistics cost
savings,  and  overall  asset  management improvements.   Compaq operates in a
very  aggressive  pricing  environment  that  will continue to put pressure on
gross  margins.    Despite  this  pressure,  we expect that the combination of
changes  in  product  mix,  continued  improvements  in  logistics  and  asset
management,  reductions  in  the  cost of materials, and higher margins on new
products should allow Compaq to maintain relatively stable gross margin levels
in  1998.

OPERATING  EXPENSES

     Research and development costs increased 18% in absolute dollars (to $817
million  from  $695  million)  and fell as a percentage of sales (to 3.3% from
3.5%)  in 1997 as compared to 1996.  In addition, Compaq spent $208 million on
in-process research and development in connection with an acquisition in 1997.
We are committed to continuing a significant research and development program,
and  research and development costs are likely to increase in absolute dollars
in  1998.

     Selling,  general  and  administrative  expense increased 18% in absolute
dollars  in  1997  while  slightly  declining  as  a percentage of sales.  The
decrease  as  a  percentage  of  sales  reflects our ongoing efforts to manage
operating  expense  growth  relative  to  sales  and gross margin levels.  The
increase  in  the  amount  of expense resulted from domestic and international
selling  expense  associated  with  higher  unit  volumes  as  well as expense
incurred  in  connection with the introduction of new products, the entry into
new  markets, the expansion of distribution channels and a greater emphasis on
customer  service  and technical support.  We anticipate that in 1998 selling,
general and administrative expense will increase in absolute dollars as Compaq
supports  significant  new product introductions, expands into new markets and
increases investment in the area of service and support, especially in support
of  Compaq's  enterprise  business.

OTHER  ITEMS

     In  1997,  Compaq  had  other  income  of  $23 million, compared to other
expense  of  $17  million and $79 million in 1996 and 1995, respectively.  The
difference  was  primarily  due to an increase in interest and dividend income
related  to higher combined cash and short-term investment balances, partially
offset  by  increased  interest  expense.    The  translation gains and losses
relating  to  the financial statements of Compaq's international subsidiaries,
net of offsetting gains and losses associated with hedging activities relating
to the net monetary assets of these subsidiaries, are included in other income
and  expense  and  resulted  in net losses of $31 million, $14 million and $33
million  in  1997,  1996  and  1995,  respectively.

LIQUIDITY  AND  CAPITAL  RESOURCES

     Compaq's  cash,  cash equivalents and short-term investments increased to
$6.8  billion  at  December  31, 1997, from $4.1 billion at December 31, 1996,
primarily  due  to  positive  cash  flow  from operating activities, including
improved  management  of  inventory, accounts receivable and accounts payable.
Accounts  receivable decreased to $2.9 billion at December 31, 1997, from $3.7
billion  at  December  31,  1996,  primarily  as  a  result  of improved asset
management  and  the sale of $1.1 billion of accounts receivable at the end of
1997. Inventory levels increased to $1.6 billion from $1.3 billion during that
period, primarily due to increased unit volumes.  Inventory turns increased to
12.6  in  1997,  from  8.3  in  1996.    Cash used in 1997 for the purchase of
property,  plant and equipment totaled $729 million.  Capital expenditures for
land,  buildings  and  equipment during 1998 are estimated to be $770 million.
Compaq  has  committed for only a small portion of such amounts and the actual
level  of  spending  will  depend  on  a variety of factors, including general
economic conditions and Compaq's business.  Accounts payable increased to $2.8
billion  from  $2.1  billion and days payable outstanding increased to 54 days
from  40  days  at  December  31, 1997 and 1996, respectively, due to improved
accounts  payable  management.
<PAGE>

     In  addition,  in  May  1997,  Compaq  completed  a cash tender offer for
substantially  all  of  its  outstanding  $150 million 6-1/2% Senior Notes Due
March  15,  1999  and  $150  million  7-1/4%  Senior Notes Due March 15, 2004.
Compaq  paid  approximately  $298 million (excluding accrued interest) for the
tendered  notes.  Also in May 1997, Compaq completed its cash tender offer for
Microcom  for  $288  million.

     We currently expect to fund expenditures for capital requirements as well
as  liquidity  needs from a combination of available cash balances, internally
generated  funds  and  financing  arrangements.   Compaq from time to time may
borrow  funds  for  actual  or  anticipated  funding  needs  or  because it is
economically  beneficial  to borrow funds instead of repatriating funds in the
form  of dividends from Compaq's foreign subsidiaries.  On September 22, 1997,
Compaq entered into a five-year $3 billion unsecured revolving credit facility
and a one-year $1 billion unsecured revolving credit facility.  In conjunction
with  the  closing  of  the  new  facilities,  Compaq retired its two existing
secured  revolving  credit  facilities  totaling  $1.5  billion. Compaq had no
borrowings  outstanding  under  either  of  the new facilities at December 31,
1997.    Compaq  has  established a commercial paper program, supported by the
syndicated credit facility, which was unused at December 31, 1997.  We believe
that  these sources of credit provide sufficient financial flexibility to meet
foreseeable  future funding requirements.  We continually evaluate the need to
establish  other  sources of working capital and will pursue those we consider
appropriate  based  upon  Compaq's  needs  and  market  conditions.

FACTORS  THAT  MAY  AFFECT  FUTURE  RESULTS

     Compaq  participates  in a highly volatile industry that is characterized
by  fierce  industry-wide  competition for market share. Industry participants
confront  aggressive  pricing  practices, continually changing customer demand
patterns,  growing  competition  from  well-capitalized  high  technology  and
consumer  electronics  companies,  and rapid technological development carried
out  in  the  midst  of  legal  battles  over intellectual property rights. In
accordance with the provisions of the Private Securities Litigation Reform Act
of  1995,  the cautionary statements set forth below discuss important factors
that  could  cause  actual  results  to  differ  materially from the projected
results  contained  in  the  forward-looking  statements  in  this  report.

     Competitive  Environment.  We  expect  the  personal  computer  market to
continue  to  expand  in 1998 in line with third party research organizations'
forecasts  of unit growth in the range of 15% to 16%. We expect the enterprise
market  to  expand  in  line  with  the  development  of internet and intranet
enterprise applications and the corporate MIS migration from legacy systems to
client/server  systems.    With  the Tandem merger and the anticipated Digital
merger,  Compaq  confronts a challenge in building its high-end UNIX solutions
product market while continuing to advance the sphere of NT-based solutions to
achieve  the  lowest  cost  of  ownership  and highest computing value for its
customers.    Industry  competition  remains  fierce  with  a  large number of
competitors  vying  for  market  share. This competition creates an aggressive
pricing  environment,  which  continues  to  put  pressure  on  Compaq's gross
margins.  Although  Compaq has programs and products focused on meeting market
demand,  gaining  market  share  profitably  and  maintaining  gross  margins,
Compaq's  ability  to achieve these goals is subject to the risks set forth in
this  discussion.
<PAGE>

     Risks  of  Newly  Acquired  Businesses.  Compaq  plans  to  use strategic
acquisitions  and  mergers to assist in the growth of its business. During the
third  quarter  1997,  Compaq  completed its merger with Tandem. Tandem's core
competencies  have  historically centered around providing reliable, scaleable
hardware  and  software  solutions for business critical applications, such as
online  transaction  processing. With the advent of the internet and expanding
corporate  intranets,  Compaq  believes that computer applications will emerge
that  will  result  in  media-rich  high  volume  transactions, causing online
transaction  processing  to  be  expanded  to  include  internet  transaction
processing.    As  a  result of the Tandem merger, Compaq is engaged in direct
sales  of computer systems with software developed to meet customers' specific
needs.   The longer-term nature of fulfilling such contracts may expose Compaq
to  new risks associated with customized specifications.  Compaq believes that
through  its  Tandem and enterprise products, it is well positioned to provide
computing  solutions to meet this demand as well as other needs for enterprise
computing.

     Subject  to  certain  regulatory  approvals  and  approval  by  Digital
shareholders,  Compaq  will  expand  its  service  offerings  and  enterprise
solutions  through the merger with Digital. At that time, Compaq will confront
a  number  of  risks associated with Digital's business.  Compaq believes that
the  Digital  merger  will  enhance  its  operating  results,  but as with any
significant  acquisition  or  merger, Compaq confronts challenges in retaining
key  employees,  synchronizing  product  roadmaps  and business processes, and
integrating  logistics,  marketing,  product  development,  and  manufacturing
operations  to  achieve  greater  efficiencies.

     Inventory.    In  the  event  of  a drop in worldwide demand for computer
products,  demand  for  one  or  more  of  Compaq's  products  is  lower  than
anticipated,  difficulties arise in managing product transitions, or component
pricing  movements  affect the value of raw material inventory, there could be
an  adverse  impact  on  inventory  levels,  cash,  and related profitability.

     Third  Party  Relationships.   We work with third parties as suppliers in
arrangements  to  provide  services  in areas other than core competencies and
ensure the service and support of our customers, and in strategic alliances to
facilitate  product  offerings,  product  development,  compatibility, and the
adoption  of  industry  standards.  Although  we try to achieve strong working
relationships  with  parties  who  share  our industry goals and have adequate
resources  to  fulfill  their  responsibilities, these relationships lead to a
number  of  risks.  First, these companies may suffer financial or operational
difficulties  that  affect their performance at the speed and volumes required
by  Compaq's  business,  which could lead to delays in product development and
gaps  in  component  supplies.  Second, major companies from which we purchase
components  or  services  (such  as  Intel,  Microsoft,  Cisco and IBM) may be
competitors  in  other  areas,  which  could  affect  pricing,  new  product
development  or  future  performance.  Finally,  difficulties  in coordinating
activities  may  lead  to  gaps  in  delivery and performance of our products.

     Rapid  Technology Cycles.  We believe the computer industry will continue
to drive rapid technology cycles. In planning product transitions, we evaluate
the  speed  at  which  customers  are  likely to switch to newer products. The
contrast between prices of old and new products, which is related to component
costs,  is a critical variable in predicting customer decisions to move to the
next  generation  of  products.  Because of the lead times associated with our
volume  production,  should  we  be  unable  to  gauge  the  rate  of  product
transitions  accurately, there could be an adverse impact on inventory levels,
cash,  and  profitability.
<PAGE>

     Product  Transitions.    In  each  product cycle, we confront the risk of
delays in production that could impact sales of newer products while we manage
the  inventory  of  older  products and facilitate the sale of older inventory
held  by  resellers. To ease product transitions, we carry out pricing actions
and  marketing  programs  to  increase  sales in reseller channels. We provide
currently  for  estimated  product returns and price protection that may occur
under reseller programs and under floor planning arrangements with third-party
finance companies. Should we be unable to sell the inventory of older products
at  anticipated  prices  or  if  dealers  hold higher than expected amounts of
inventory subject to price protection at the time of planned price reductions,
there  could  be  a  resulting  adverse  impact  on  sales, gross margins, and
profitability.

     Systems Implementation.  Compaq continues to focus on making its business
and  information  management  processes  more  efficient  in order to increase
customer  satisfaction, improve productivity, and lower costs. In the event of
a  delay  in  implementing  improvements,  there could be an adverse impact on
inventory  levels,  cash,  and related profitability. In connection with these
efforts,  we  are  moving  many  of  our  systems from a legacy environment of
proprietary  systems  to  client-server  architectures  as well as integrating
systems  from  newly acquired businesses. Should the transition to new systems
not  occur  in a smooth and orderly manner, we could experience disruptions in
operations,  which  could  have  an  adverse  financial  impact.

     Technology  Standards  and  Key  Licenses.   Participants in the computer
industry  generally  rely  on  the  creation  and implementation of technology
standards  to  win  the  broadest market acceptance for their products. Compaq
must successfully manage and participate in the development of standards while
continuing  to  differentiate  its  products  in a manner valued by customers.
While  industry  participants  generally accept, and may encourage, the use of
their  intellectual property by third parties under license, when intellectual
property  owned  by  competitors  or suppliers becomes accepted as an industry
standard,  Compaq  must  obtain  a license, purchase components utilizing such
technology from the owners of such technology or their licensees, or otherwise
acquire  rights to use such technology, which could result in increased costs.
Compaq  has  entered  into  license agreements with key industry participants,
including Intel, Texas Instruments and Microsoft.  Compaq has been negotiating
with  IBM  and  Microsoft for the successors to the current agreements.  There
can  be  no  assurance  that Compaq will be able to negotiate terms under such
license  agreements  that  offer  it  competitive  market  advantages.

     Production  Forecasts.  In managing production, we must forecast customer
demand  for  our products. Should we underestimate the supplies needed to meet
demand, we could be unable to meet customer demand. Should we overestimate the
supplies  needed  to  meet  customer  demand,  cash and profitability could be
adversely  affected. Many of the components used in our products, particularly
microprocessors and memory, experience steep price declines over their product
lives. If we are unable to manage purchases and utilization of such components
efficiently  to maintain low inventory levels immediately prior to major price
declines,  we  could be unable to take immediate advantage of such declines to
lower product costs, which could adversely affect our sales and gross margins.
In  addition,  should  prices  for  components increase unexpectedly, Compaq's
gross  margin  could  be  adversely  affected.  In  1997, Compaq established a
variety  of programs designed to increase its manufacturing, distribution, and
business  process efficiencies. The success of these programs depends upon the
implementation  of  more  efficient  component  supply,  manufacturing,  and
distribution  strategies  to increase overall efficiencies, which will lead to
lower  prices  being  offered  to  its  end  users.

     Credit Risks.  Compaq's primary means of distribution remains third-party
resellers. We continually monitor and manage the credit we extend to resellers
and  attempt  to  limit  credit  risks  by  broadening  distribution channels,
utilizing certain risk transfer arrangements and obtaining security interests.
Our  business  could  be  adversely  affected  in the event that the financial
condition of third-party computer resellers erodes. Upon the financial failure
of  a  major reseller, we could experience disruptions in distribution as well
as  the  loss of the unsecured portion of any outstanding accounts receivable.
Geographic  expansion,  particularly the expansion of manufacturing operations
in  developing countries, such as Brazil and China, and the expansion of sales
into  economically  volatile  areas  such  as  Asia,  Latin  America and other
emerging markets, subject Compaq to a number of economic and other risks, such
as  financial  instability among resellers in these regions.  Compaq generally
has  experienced  longer  accounts  receivable  cycles in emerging markets, in
particular  Asia/Pacific and Latin America, when compared to U.S. and European
markets.    In addition, geographic expansion subjects Compaq to political and
financial  instability  of  the countries into which Compaq expands, including
currency  devaluation  and  interest  rate  fluctuations.  Compaq continues to
evaluate  its  business  operations  in  these  regions  and  attempts to take
measures  to  limit  risks  in  these  areas.
<PAGE>

     Year 2000 Compliance.  Compaq believes the cost of administering its Year
2000 readiness program described above, exclusive of any customer claims, will
not  have  a  material  adverse  impact on future earnings.  Since there is no
uniform definition of Year 2000 "compliance" and since all customer situations
cannot  be  anticipated,  particularly  those  involving third party products,
Compaq  may  see  an  increase in warranty and other claims as a result of the
Year  2000  transition.    Such  claims,  if successful, could have a material
adverse  impact  on  future  results.      See  "Item 1.  Business - Year 2000
Transition"  for  additional  information.

     Projects  to  address Compaq's internal information systems currently are
underway,  and Compaq is in the process of replacing some of its older systems
with  new  systems  that  are able to handle the Year 2000 transition.  Compaq
will  continue  to  review internal system requirements and to correct further
issues  as they are identified.  Although Compaq's evaluation of these systems
is still in process, we believe that the impact of the Year 2000 transition on
its  internal  systems  will  not  have  a  material  adverse impact on future
results.    In  addition, Compaq's task force is evaluating the impact of Year
2000  compliance  of  its suppliers, is asking its suppliers about compliance,
and  is  establishing  Year 2000 compliance requirements for suppliers.  Since
the  compliance of suppliers depends upon their cooperation, failures remain a
possibility,  and  could  have  a  material  adverse impact on future results.

     Tax  Rate.    Compaq  currently  has a 30% effective tax rate, before the
effect  of  non-deductible  purchased in-process technology and merger-related
costs  and  expects this rate will continue at approximately the same level in
1998.    Compaq benefits from a tax holiday in Singapore that expires in 2001,
with  a  potential  extension  to August 2004 if certain cumulative investment
levels  and  other conditions are met.  Compaq's tax rate is heavily dependent
upon  the  proportion  of  earnings  that  is  derived  from  its  Singaporean
manufacturing  subsidiary  and  its  ability  to  reinvest  those  earnings
permanently  outside  the  U.S.    If  the  earnings  of  this subsidiary as a
percentage  of  Compaq's  total  earnings  were  to decline significantly from
anticipated  levels,  or should Compaq's ability to reinvest these earnings be
reduced,  Compaq's  effective  tax rate would exceed the current estimate.  In
addition,  should  Compaq's  intercompany transfer pricing with respect to its
Singaporean  manufacturing  subsidiary  require  significant adjustment due to
audits  or  regulatory  changes,  Compaq's  overall  effective  tax rate could
increase.

     Currency  Fluctuations.    Compaq's  risks  associated  with  currency
fluctuations  are  discussed  in  Item  7A  below.

     Because  of  the  foregoing factors, as well as other variables affecting
Compaq's  operating  results,  past  financial  performance  should  not  be
considered  a  reliable  indicator of future performance, and investors should
not  use  historical trends to anticipate results or trends in future periods.
<PAGE>

ITEM  7A.    MARKET  RISKS

     Compaq  is  exposed  to  market  risks, which include changes in U.S. and
international interest rates as wells as changes in currency exchange rates as
measured  against  the  U.S. dollar and each other. We attempt to reduce these
risks  by  utilizing financial instruments, including derivative transactions,
pursuant  to  company  policies.

     Compaq  uses  market  valuations  and  value-at-risk valuation methods to
assess  market risk of its financial instruments and derivative portfolios. It
uses  J.P.  Morgan's  RiskMetrics    to  estimate  the  value-at-risk based on
estimates  of  volatility  and  correlation  of market factors drawn from J.P.
Morgan's  RiskMetrics    data  sets  as  of  December  31,  1997. Our measured
value-at-risk from holding derivative and other financial instruments, using a
95%  confidence  level  and  assuming normal market conditions at December 31,
1997,  was  immaterial.

     The value of the U.S. dollar affects Compaq's financial results.  Changes
in  exchange  rates  may  positively  or  negatively affect Compaq's sales (as
expressed  in  U.S.  dollars), gross margins, operating expenses, and retained
earnings.    Compaq  engages in hedging programs aimed at limiting in part the
impact  of currency fluctuations.  Using primarily forward exchange contracts,
Compaq  hedges those assets and liabilities that, when remeasured according to
generally  accepted  accounting  principles, impact the income statement.  For
certain  markets,  particularly  Latin  America,  Compaq  has  determined that
ongoing  hedging  of non-U.S. dollar net monetary assets is not cost effective
and  instead  attempts  to  minimize  currency  exposure  risk through working
capital  management.   There can be no assurance that such an approach will be
successful, especially in the event of a significant and sudden decline in the
value  of  local  currencies.    From  time  to time, Compaq purchases foreign
currency  option contracts as well as short-term forward exchange contracts to
protect  against currency exchange risks associated with the anticipated sales
of  Compaq's international marketing subsidiaries, with the exception of Latin
America.    These  hedging  activities provide only limited protection against
currency  exchange  risks.  Factors  that  could  impact  the effectiveness of
Compaq's  hedging  programs include accuracy of sales forecasts, volatility of
the  currency  markets,  and availability of hedging instruments. All currency
contracts  that  are entered into by Compaq are components of hedging programs
and  are  entered  into  for  the  sole  purpose  of  hedging  an  existing or
anticipated currency exposure, not for speculation.  Although Compaq maintains
these  programs  to  reduce  the impact of changes in currency exchange rates,
when  the  U.S. dollar sustains a strengthening position against currencies in
which Compaq sells products or a weakening exchange rate against currencies in
which  Compaq  incurs  costs,  Compaq's sales or costs are adversely affected.
<PAGE>

ITEM  8:    FINANCIAL  STATEMENTS  AND  SUPPLEMENTARY  DATA

<TABLE>
<CAPTION>

Index  to  Consolidated  Financial  Statements

  Financial Statements:                                                               Page
                                                                                      ----
<S>                                                                                   <C>
    Report of Independent Accountants. . . . . . . . . . . . . . . . . . . . . . . .    20
    Consolidated Balance Sheet at December 31, 1997 and 1996 . . . . . . . . . . . .    21
    Consolidated Statement of Income for the three years ended December 31, 1997 . .    22
    Consolidated Statement of Cash Flows for the three years ended December 31, 1997    23
    Consolidated Statement of Stockholders' Equity for the three years ended
      December 31, 1997  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    24
    Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . .    25

      Financial Statement Schedules:
        For the three years ended December 31, 1997
          Schedule II - Valuation and Qualifying Accounts. . . . . . . . . . . . . .    43
</TABLE>
<PAGE>


ITEM  9:    DISAGREEMENTS  ON  ACCOUNTING  AND  FINANCIAL  DISCLOSURE

     None

<PAGE>
REPORT  OF  INDEPENDENT  ACCOUNTANTS


To  the  Stockholders  and  Board  of  Directors  of
Compaq  Computer  Corporation


In  our  opinion,  the  consolidated  financial  statements  listed  in  the
accompanying  index  present  fairly,  in all material respects, the financial
position  of  Compaq Computer Corporation and its subsidiaries at December 31,
1997  and  1996,  and the results of their operations and their cash flows for
each  of  the three years in the period ended December 31, 1997, in conformity
with  generally accepted accounting principles. These financial statements are
the  responsibility  of  the  Company's  management;  our responsibility is to
express  an  opinion  on  these  financial  statements based on our audits. We
conducted our audits of these statements in accordance with generally accepted
auditing  standards which require that we plan and perform the audit to obtain
reasonable  assurance  about  whether  the  financial  statements  are free of
material  misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and disclosures in the financial statements, assessing
the  accounting  principles used and significant estimates made by management,
and  evaluating  the overall financial statement presentation. We believe that
our  audits  provide  a  reasonable  basis  for  the  opinion expressed above.





/S/ PRICE WATERHOUSE LLP
------------------------
PRICE  WATERHOUSE  LLP

Houston,  Texas
January  21,  1998,  except  as  to  Note  11, which is as of January 26, 1998

<PAGE>

<TABLE>
<CAPTION>

                                   COMPAQ COMPUTER CORPORATION
                                   CONSOLIDATED BALANCE SHEET


December 31, In millions, except par value                                       1997     1996
================================================================================================
<S>                                                                             <C>      <C>
ASSETS

Current assets:
 Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 6,418  $ 3,008
 Short-term investments. . . . . . . . . . . . . . . . . . . . . . . . . . . .      344    1,073
 Accounts receivable, less allowance of $243 and $247. . . . . . . . . . . . .    2,891    3,718
 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    1,570    1,267
 Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . .      595      836
 Other current assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . .      199      187
                                                                                -------  -------
   Total current assets. . . . . . . . . . . . . . . . . . . . . . . . . . . .   12,017   10,089
Property, plant and equipment, less accumulated depreciation . . . . . . . . .    1,985    1,753
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      629      489
                                                                                -------  -------
                                                                                $14,631  $12,331
                                                                                =======  =======

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
 Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 2,837  $ 2,098
 Income taxes payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . .      195      533
 Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . .    2,170    2,110
                                                                                -------  -------
   Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . .    5,202    4,741
                                                                                -------  -------
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        -      300
                                                                                -------  -------
Commitments and contingencies (Note 10)
Stockholders' equity:
 Preferred stock, $.01 par value (authorized: 10 million shares; issued: none)
 Common stock and capital in excess of $.01 par value
   (authorized: 3 billion shares; issued and outstanding:
   1,519 million shares at December 31, 1997 and
   1,492 million shares at December 31, 1996). . . . . . . . . . . . . . . . .    2,096    1,779
 Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    7,333    5,511
                                                                                -------  -------
   Total stockholders' equity. . . . . . . . . . . . . . . . . . . . . . . . .    9,429    7,290
                                                                                -------  -------
                                                                                $14,631  $12,331
                                                                                =======  =======
<FN>
The  accompanying  notes  are  an  integral  part  of  these  financial  statements.
</TABLE>
<PAGE>

<TABLE>
<CAPTION>

                               COMPAQ COMPUTER CORPORATION
                             CONSOLIDATED STATEMENT OF INCOME



Year ended December 31, In millions, except per share amounts    1997     1996     1995
=========================================================================================
<S>                                                            <C>       <C>      <C>

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $24,584   $20,009  $16,675
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . .   17,833    14,855   12,291
                                                               --------  -------  -------
                                                                 6,751     5,154    4,384
                                                               --------  -------  -------

Selling, general and administrative expense . . . . . . . . .    2,947     2,507    2,186
Research and development costs. . . . . . . . . . . . . . . .      817       695      552
Purchased in-process technology . . . . . . . . . . . . . . .      208         -      241
Restructuring charge. . . . . . . . . . . . . . . . . . . . .        -        52        -
Merger-related costs. . . . . . . . . . . . . . . . . . . . .       44         -        -
Other income and expense, net . . . . . . . . . . . . . . . .      (23)       17       79
                                                               --------  -------  -------
                                                                 3,993     3,271    3,058
                                                               --------  -------  -------
Income before provision for income taxes. . . . . . . . . . .    2,758     1,883    1,326
Provision for income taxes. . . . . . . . . . . . . . . . . .      903       565      433
                                                               --------  -------  -------
Net income. . . . . . . . . . . . . . . . . . . . . . . . . .  $ 1,855   $ 1,318  $   893
                                                               ========  =======  =======

Earnings per common share:
 Basic. . . . . . . . . . . . . . . . . . . . . . . . . . . .  $  1.23   $  0.90  $  0.62
                                                               ========  =======  =======
 Diluted. . . . . . . . . . . . . . . . . . . . . . . . . . .  $  1.19   $  0.87  $  0.60
                                                               ========  =======  =======

Shares used in computing earnings per common share:
 Basic. . . . . . . . . . . . . . . . . . . . . . . . . . . .    1,505     1,472    1,442
                                                               ========  =======  =======
 Diluted. . . . . . . . . . . . . . . . . . . . . . . . . . .    1,564     1,516    1,492
                                                               ========  =======  =======
<FN>
The  accompanying  notes  are  an  integral  part  of  these  financial  statements.
</TABLE>
<PAGE>

<TABLE>
<CAPTION>

                               COMPAQ COMPUTER CORPORATION
                           CONSOLIDATED STATEMENT OF CASH FLOWS



Year ended December 31, In millions                             1997      1996     1995
=========================================================================================
<S>                                                           <C>       <C>       <C>
Cash flows from operating activities:
  Net income . . . . . . . . . . . . . . . . . . . . . . . .  $ 1,855   $ 1,318   $  893 
  Adjustments to reconcile net income to net cash
    provided by operating activities:
  Depreciation and amortization. . . . . . . . . . . . . . .      545       483      384 
  Provision for bad debts. . . . . . . . . . . . . . . . . .       19       160       47 
  Deferred income taxes. . . . . . . . . . . . . . . . . . .      202      (405)     (24)
  Purchased in-process technology. . . . . . . . . . . . . .      208         -      241 
  Restructuring charge . . . . . . . . . . . . . . . . . . .        -        52        - 
  Changes in operating assets and liabilities:
    Accounts receivable. . . . . . . . . . . . . . . . . . .      614      (228)    (910)
    Inventories. . . . . . . . . . . . . . . . . . . . . . .     (335)    1,014     (144)
    Other current assets . . . . . . . . . . . . . . . . . .       63        34       (9)
    Accounts payable . . . . . . . . . . . . . . . . . . . .      756       562      479 
    Income taxes payable . . . . . . . . . . . . . . . . . .     (319)      131      (66)
    Other current liabilities. . . . . . . . . . . . . . . .       80       445      142 
                                                              --------  --------  -------
  Net cash provided by operating activities. . . . . . . . .    3,688     3,566    1,033 
                                                              --------  --------  -------
Cash flows from investing activities:
  Purchases of property, plant and equipment, net. . . . . .     (729)     (484)    (565)
  Purchases of short-term investments. . . . . . . . . . . .   (2,405)   (1,401)       - 
  Proceeds from short-term investments . . . . . . . . . . .    3,134       328        - 
  Acquisition of businesses, net of cash acquired. . . . . .     (268)      (22)    (318)
  Other, net . . . . . . . . . . . . . . . . . . . . . . . .      (31)      (75)     (29)
                                                              --------  --------  -------
  Net cash used in investing activities. . . . . . . . . . .     (299)   (1,654)    (912)
                                                              --------  --------  -------
Cash flows from financing activities:
  Repayment of long-term debt. . . . . . . . . . . . . . . .     (293)        -        - 
  Issuance of common stock pursuant to stock option plans. .      188       131      123 
  Tax benefit associated with stock options. . . . . . . . .      156        91       65 
  Other, net . . . . . . . . . . . . . . . . . . . . . . . .      (37)        -        - 
                                                              --------  --------  -------
  Net cash provided by financing activities. . . . . . . . .       14       222      188 
                                                              --------  --------  -------
Effect of exchange rate changes on cash and cash equivalents        7        21      (42)
                                                              --------  --------  -------
  Net increase in cash and cash equivalents. . . . . . . . .    3,410     2,155      267 
Cash and cash equivalents at the beginning of the year . . .    3,008       853      586 
                                                              --------  --------  -------
Cash and cash equivalents at the end of the year . . . . . .  $ 6,418   $ 3,008   $  853 
                                                              ========  ========  =======

SUPPLEMENTAL CASH FLOW INFORMATION

Year ended December 31, In millions. . . . . . . . . . . . .    1997      1996     1995
=========================================================================================

Interest paid. . . . . . . . . . . . . . . . . . . . . . . .  $   164   $   106   $  113 
Income taxes paid. . . . . . . . . . . . . . . . . . . . . .  $   804   $   953   $  560 
<FN>
The  accompanying  notes  are  an  integral  part  of  these  financial  statements.
</TABLE>
<PAGE>

<TABLE>
<CAPTION>

                                  COMPAQ COMPUTER CORPORATION
                        CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                                                   Common Stock
                                           ------------------------------
                                                           Par Value
                                           Number of      and Capital       Retained
In millions                                  Shares     in Excess of Par    Earnings    Total
==============================================================================================
<S>                                        <C>         <C>                 <C>         <C>
Balance, December 31, 1994. . . . . . . .      1,427   $           1,341   $   3,303   $4,644 
Issuance pursuant to stock option plans .         33                 123           -      123 
Tax benefit associated with stock options          -                  65           -       65 
Other . . . . . . . . . . . . . . . . . .         (2)                 14          18       32 
Net income. . . . . . . . . . . . . . . .          -                   -         893      893 
                                           ----------  ------------------  ----------  -------
Balance, December 31, 1995. . . . . . . .      1,458               1,543       4,214    5,757 
Issuance pursuant to stock option plans .         34                 131           -      131 
Tax benefit associated with stock options          -                  91           -       91 
Other . . . . . . . . . . . . . . . . . .          -                  14         (21)      (7)
Net income. . . . . . . . . . . . . . . .          -                   -       1,318    1,318 
                                           ----------  ------------------  ----------  -------
Balance, December 31, 1996. . . . . . . .      1,492               1,779       5,511    7,290 
Issuance pursuant to stock option plans .         30                 188           -      188 
Tax benefit associated with stock options          -                 156           -      156 
Other . . . . . . . . . . . . . . . . . .         (3)                (27)        (33)     (60)
Net income. . . . . . . . . . . . . . . .          -                   -       1,855    1,855 
                                           ----------  ------------------  ----------  -------
Balance, December 31, 1997. . . . . . . .      1,519   $           2,096   $   7,333   $9,429 
                                           ==========  ==================  ==========  =======
<FN>
The  accompanying  notes  are  an  integral  part  of  these  financial  statements.
</TABLE>
<PAGE>

NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS

NOTE  1.    DESCRIPTION  OF  BUSINESS  AND  SUMMARY  OF SIGNIFICANT ACCOUNTING
POLICIES

DESCRIPTION  OF  BUSINESS.   Founded in 1982, Compaq Computer Corporation is a
worldwide information technology company and is the largest global supplier of
personal  computers. Compaq develops and markets hardware, software, solutions
and  services,  including  industry-leading  enterprise  computing  solutions,
fault-tolerant  business-critical  solutions,  networking  and  communication
products,  commercial  desktop  and portable products and consumer PCs. Compaq
products  are  sold and supported in more than 100 countries through a network
of authorized Compaq marketing partners. Compaq markets its products primarily
to  business,  home,  government,  and  education customers. References to the
"Company"  mean  Compaq  and  its  subsidiaries.

PRINCIPLES  OF  CONSOLIDATION.   The consolidated financial statements include
the  accounts  of  Compaq  and its subsidiaries.  All significant intercompany
transactions  have  been  eliminated.

ESTIMATES.    The  preparation  of  financial  statements  in  conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets, liabilities, sales
and  expenses,  and  disclosure  of contingent assets and liabilities.  Actual
results  could  differ  from  those  estimates.

CASH  EQUIVALENTS  AND  SHORT-TERM  INVESTMENTS.    Cash equivalents primarily
include  money  market  instruments,  commercial  paper  and other investments
having  maturities of three months or less at date of acquisition.  Short-term
investments  include  certificate  of  deposits,  commercial  paper  and other
investments having maturities longer than three months at date of acquisition.
For  reporting  purposes, such cash equivalents and short-term investments are
stated  at cost plus accrued interest which approximates fair value. The total
amount  of time deposits outstanding at December 31, 1997 included in cash and
cash  equivalents  was  $707  million.

INVENTORIES.    Inventories  are  stated  at the lower of cost or market, cost
being  determined on a first-in, first-out basis.  Inventories at December 31,
1997  and  1996  were  comprised  of raw material and work-in progress of $767
million and $634 million, and finished goods of $803 million and $633 million,
respectively.

PROPERTY,  PLANT  AND  EQUIPMENT.  Property, plant and equipment are stated at
cost.  Major  renewals  and  improvements are capitalized; minor replacements,
maintenance  and  repairs  are  charged to current operations. Depreciation is
computed  by applying the straight-line method over the estimated useful lives
of  the  related assets, which are 30 years for buildings and range from three
to ten years for machinery and equipment. Leasehold improvements are amortized
over  the  shorter  of  the  useful life of the improvement or the life of the
related  lease.

LONG-LIVED ASSETS.  Compaq reviews for the impairment of long-lived assets and
certain  identifiable  intangibles whenever events or changes in circumstances
indicate  that  the  carrying  amount  of an asset may not be recoverable.  An
impairment  loss would be recognized when estimated future cash flows expected
to  result from the use of the asset and its eventual disposition is less than
its  carrying  amount.   Compaq has not identified any such impairment losses.
<PAGE>

SALES  RECOGNITION.   Compaq recognizes sales at the time products are shipped
to  its  customers.  Provision is made currently for estimated product returns
and  price  protection  which  may  occur  under  programs Compaq has with its
customers.    Compaq  provides for the estimated cost that may be incurred for
post-sales  support  and  product  warranties  upon  shipment.  When  other
significant  obligations  remain  after  products  are  delivered,  revenue is
recognized  only  after  such  obligations  are fulfilled. Product support and
other  revenues  are  recognized ratably over the contractual period or as the
services  are  provided.

ADVERTISING COSTS.  Advertising costs are charged to operations when incurred.
The  cost  of  direct-response  advertising  is  not  significant. Advertising
expenses  for  1997,  1996  and  1995 were $223 million, $175 million and $224
million,  respectively.

FOREIGN CURRENCY.  Compaq's foreign subsidiaries (other than those acquired in
the  merger  with  Tandem  Computers Incorporated-Note 2) have the U.S. dollar
designated as their functional currency. Financial statements of these foreign
subsidiaries  are  translated to U.S. dollars for consolidation purposes using
current  rates  of exchange for monetary assets and liabilities and historical
rates  of  exchange  for  nonmonetary  assets and related elements of expense.
Sales  and other expense elements are translated at rates that approximate the
rates  in  effect  on  the transaction dates. Translation gains and losses are
included  in  Compaq's  consolidated  statement  of  income.  The  foreign
subsidiaries  acquired  in  the  merger  with Tandem have designated the local
currency  as their functional currency. For these subsidiaries, the assets and
liabilities  are  translated  into  U.S. dollars for consolidation purposes at
current  exchange  rates.  Sales  and other expense elements are translated at
rates  that  approximate the rates in effect on the transaction dates. To date
all  ongoing  adjustments  resulting  from  the  process  of  translating such
subsidiaries' financial statements into U.S. dollars have not been significant
and  have  been  accumulated  and  recorded  within  retained  earnings.

INCOME  TAXES.  The provision for income taxes is computed based on the pretax
income  included  in  the  Consolidated  Statement  of  Income.  The asset and
liability  approach  is  used to recognize deferred tax assets and liabilities
for  the expected future tax consequences of temporary differences between the
carrying  amounts  and  the  tax  bases  of  assets  and  liabilities.

EARNINGS  PER  COMMON SHARE.  Compaq adopted Statement of Financial Accounting
Standard  No.  128  ("FAS  128"),  Earnings  Per Share beginning with Compaq's
fourth  quarter of 1997.  All prior period earnings per common share data have
been restated  to conform to the provisions of this statement.  Basic earnings
per common  share  is  computed  using  the  weighted average number of shares
outstanding.  Diluted earnings per common share is computed using the weighted
average  number  of  shares  outstanding  adjusted  for the incremental shares
attributed  to  outstanding  options  to  purchase  common stock.  Incremental
shares  of  59  million,  44  million  and  50  million in 1997, 1996 and 1995
respectively,  were  used  in  the  calculation of diluted earnings per common
share.    Options  to  purchase  9 million, 28 million and 1 million shares of
common  stock  in  1997, 1996 and 1995, respectively, were not included in the
computation  of  diluted earnings per common share because the option exercise
price  was  greater  than  the  average  market  price  of  the  common stock.

COMPREHENSIVE  INCOME.    Compaq  adopted  Statement  of  Financial Accounting
Standard  No.  130  ("FAS  130"), Comprehensive Income beginning with Compaq's
fourth  quarter  of  1997.    The components of comprehensive income which are
excluded  from  net  income  are  not  significant,  individually  or  in  the
aggregate,  and  therefore  no  separate statement of comprehensive income has
been  presented.
<PAGE>

STOCK-BASED  COMPENSATION.    Compaq  measures  compensation  expense  for its
stock-based  employee  compensation plans using the intrinsic value method and
has  provided  in Note 8 pro forma disclosures of the effect on net income and
earnings  per  share  as  if  the  fair value-based method had been applied in
measuring  compensation  expense.

RECLASSIFICATIONS.    Certain  prior  year  amounts  have been reclassified to
conform  to  the  1997  presentation.

NOTE  2.    ACQUISITIONS

On  August  29,  1997,  Compaq  merged  with  Tandem  Computers  Incorporated
("Tandem")  in  a  stock-for-stock  transaction  accounted for as a pooling of
interests.    Tandem  provides  its  customers  with  reliable,  scaleable,
fault-tolerant  enterprise  computer  systems  and client/server solutions. In
connection  with the merger, Compaq issued 126 million shares of common stock,
based  upon  an  exchange ratio of 1.05 shares of Compaq common stock for each
share  of  Tandem  common  stock.    Merger-related  costs  of $44 million are
reflected  in  the  Consolidated  Statement  of  Income  as  a  result  of the
transaction.  The  financial  data included in these financial statements have
been  restated  to  reflect  the  merger  with Tandem.  There were no material
transactions between Compaq and Tandem during the periods prior to the merger.
The consolidated financial data for the years ended December 31, 1996 and 1995
includes  the  results  of  Tandem  for the years ended September 30, 1996 and
1995.  For  1997,  Tandem's  fiscal  year end was changed from September 30 to
December  31.  As permitted by Securities and Exchange Commission regulations,
Tandem's  three-month period ended December 31, 1996 has been omitted from the
Consolidated  Statement  of  Income  and recorded as an adjustment to retained
earnings  in  1997.    Tandem's sales and net income were $436 million and $12
million,  respectively,  for that period.  Tandem also generated a $40 million
increase  in  cash  and cash equivalents during the quarter ended December 31,
1996.

The  following  information  presents  certain  income  statement  data of the
separate  companies  for  the  periods  preceding  the  acquisition:

<TABLE>
<CAPTION>

                    Six months ended,       Year ended,
                                        ------------------
In millions           June 30, 1997       1996      1995
==========================================================
<S>                 <C>                 <C>       <C>
Sales:
Compaq . . . . . .  $            9,817  $18,109   $14,755 
Tandem . . . . . .                 970    1,900     1,920 
                    ------------------  --------  --------
                    $           10,787  $20,009   $16,675 
                    ------------------  --------  --------
Net Income (Loss):
Compaq . . . . . .  $              601  $ 1,313   $   789 
Tandem . . . . . .                  70      (22)      107 
Adjustments. . . .                   -       27        (3)
                    ------------------  --------  --------
                    $              671  $ 1,318   $   893 
                    ==================  ========  ========
</TABLE>

The  consolidated  financial  results  presented above include adjustments to
Tandem's  deferred  tax  valuation allowance related to realization of certain
deferred  tax  assets  as  a  combined  entity  with  Compaq.
<PAGE>

In  May  1997,  Compaq  completed  a  tender  offer  for  Microcom,  Inc.,  a
manufacturer  of  remote  access  technologies  and  solutions.  The aggregate
purchase  price  of  $288  million  consisted  of $278 million in cash and the
assumption  of  certain employee stock options.  The transaction was accounted
for  as  a  purchase.  Accordingly,  the results of operations of the acquired
business  and  the  fair  market values of the acquired assets and liabilities
were  included  in Compaq's financial statements from the date of acquisition.
The  aggregate purchase price has been allocated to the assets and liabilities
acquired. The aggregate purchase price included $208 million, representing the
value  of  in-process  technology  that  had  not  yet  reached  technological
feasibility  and  had  no  alternative future use. This amount was expensed in
Compaq's  Consolidated  Statement  of  Income  during  1997.  In addition, the
aggregate  purchase  price  included  approximately  $58  million representing
purchased  technology  and  other  identifiable  intangibles  which  are being
amortized  over  a  three  year  period.  Pro  forma  statements of operations
reflecting  the acquisition of Microcom are not shown as they would not differ
materially  from  reported  results.

During  1995,  Compaq  acquired  two  companies that develop, manufacture, and
supply fast ethernet hubs, switches and related products, and a small software
company.  The  aggregate  purchase  price  of  $386  million  consisted of the
issuance  of  1.2 million shares of Compaq common stock, $359 million in cash,
of  which  $22  million  was paid in 1996, and the assumption of certain stock
options.  The  acquisitions  were  accounted  for  as purchases. The aggregate
purchase price included $241 million which represented the value of in-process
technology  that  had  not  yet  reached  technological feasibility and had no
alternative  future  use.  This  amount  was expensed in Compaq's Consolidated
Statement  of  Income  during  1995. In addition, the aggregate purchase price
included  $126  million  representing purchased technology, other identifiable
intangibles  and goodwill which are being amortized over a three to seven year
period.

NOTE  3.    PROPERTY,  PLANT  AND  EQUIPMENT

Property,  plant  and  equipment  are  summarized  below:

<TABLE>
<CAPTION>

December 31, In millions               1997    1996
====================================================
<S>                                   <C>     <C>
Land . . . . . . . . . . . . . . . .  $  185  $  212
Buildings and leasehold improvements   1,076   1,002
Machinery and equipment. . . . . . .   2,392   2,010
Construction-in-process and other. .     373     272
                                      ------  ------
                                       4,026   3,496
Less accumulated depreciation. . . .   2,041   1,743
                                      ------  ------
                                      $1,985  $1,753
                                      ======  ======
</TABLE>


Depreciation  expense  totaled  $447 million, $387 million and $326 million in
1997,  1996  and  1995,  respectively.

NOTE  4.    OTHER  CURRENT  LIABILITIES

The  estimated  costs which may be incurred for post-sales support and product
warranties  of  $450  million  and $478 million were included in other current
liabilities  at  December  31,  1997  and  1996,  respectively.

During  1996,  Tandem  took  a  restructuring  action including a reduction in
headcount,  consolidation  of  facilities  and  disposal  of  assets.    The
restructuring  action  resulted  in  a  charge  to  income of $52 million.  No
significant  restructuring  accruals  remain  at  December  31,  1997.
<PAGE>

NOTE  5.    CREDIT  AGREEMENTS  AND  FINANCING  ARRANGEMENTS

At  December  31,  1996,  Compaq had long-term debt consisting of $150 million
6 1/2% Senior  Notes  Due  March 15, 1999 and $150 million 7 1/4% Senior Notes
Due  March  15,  2004.  In  May 1997, Compaq completed a cash tender offer for
substantially all of these outstanding notes. The remaining amount outstanding
is  included  in  other  current  liabilities.

On  September  22,  1997, Compaq entered into a five-year $3 billion unsecured
revolving credit facility and a one-year $1 billion unsecured revolving credit
facility.  In  conjunction  with  the  closing  of  the new facilities, Compaq
retired  two  existing  secured  revolving  credit  facilities  totaling  $1.5
billion.   There were no borrowings outstanding under these facilities in 1997
and  1996.

NOTE  6.    OTHER  INCOME  AND  EXPENSE

Other  income  and  expense  consisted  of  the  following  components:

<TABLE>
<CAPTION>

Year ended December 31, In millions                 1997    1996    1995
=========================================================================
<S>                                                <C>     <C>     <C>
Interest and dividend income. . . . . . . . . . .  $(266)  $(126)  $ (71)
Interest (income) expense associated with hedging     (4)     (3)     18 
Other interest expense. . . . . . . . . . . . . .    168     106      94 
Currency losses, net. . . . . . . . . . . . . . .     31      14      33 
Other, net. . . . . . . . . . . . . . . . . . . .     48      26       5 
                                                   ------  ------  ------
                                                   $ (23)  $  17   $  79 
                                                   ======  ======  ======
</TABLE>


NOTE  7.    PROVISION  FOR  INCOME  TAXES

The  components  of  income before provision for income taxes were as follows:
<TABLE>
<CAPTION>


Year ended December 31, In millions   1997    1996    1995
===========================================================
<S>                                  <C>     <C>     <C>
Domestic. . . . . . . . . . . . . .  $1,789  $  929  $  504
Foreign . . . . . . . . . . . . . .     969     954     822
                                     ------  ------  ------
                                     $2,758  $1,883  $1,326
                                     ======  ======  ======
</TABLE>
<PAGE>

<TABLE>
<CAPTION>

The  provision  for  income  taxes  charged  to  operations  was  as  follows:

Year ended December 31, In millions  1997    1996    1995
==========================================================
<S>                                  <C>    <C>     <C>
Current tax expense
  U.S. federal. . . . . . . . . . .  $ 430  $ 672   $ 274 
  State and local . . . . . . . . .     30     34      12 
  Foreign . . . . . . . . . . . . .    241    238     183 
                                     -----  ------  ------
    Total current . . . . . . . . .    701    944     469 
                                     -----  ------  ------

Deferred tax expense
  U.S. federal. . . . . . . . . . .    194   (332)     (8)
  State and local . . . . . . . . .      2    (19)     (2)
  Foreign . . . . . . . . . . . . .      6    (28)    (26)
                                     -----  ------  ------
    Total deferred. . . . . . . . .    202   (379)    (36)
                                     -----  ------  ------
    Total provision . . . . . . . .  $ 903  $ 565   $ 433 
                                     =====  ======  ======
</TABLE>


Total  income  tax  expense  for 1997, 1996 and 1995 resulted in effective tax
rates  of  33%,  30%  and  33%,  respectively. The reasons for the differences
between  these  effective  tax rates and the U.S. statutory rate of 35% are as
follows:

<TABLE>
<CAPTION>

Year ended December 31, In millions              1997    1996    1995
======================================================================
<S>                                             <C>     <C>     <C>
Tax expense at U.S. statutory rate . . . . . .  $ 965   $ 659   $ 464 
Foreign tax effect, net. . . . . . . . . . . .    (88)   (105)    (73)
Non-deductible purchased in-process technology     73       -      85 
Other, net . . . . . . . . . . . . . . . . . .    (47)     11     (43)
                                                ------  ------  ------
                                                $ 903   $ 565   $ 433 
                                                ======  ======  ======
</TABLE>


In connection with Compaq's 1997 and 1995 acquisitions, Compaq recorded a $208
million  and  a  $241  million  non-recurring,  non-tax-deductible  charge for
purchased  in-process technology, respectively.  In connection with the Tandem
merger,  Compaq  incurred  $44  million  of  non-recurring, non-tax-deductible
merger  expenses.    These  non-taxable  charges  and  expenses resulted in an
increase  to  the  1997 and 1995 effective tax rate from 30% to 33% and 28% to
33%,  respectively.

Compaq  benefits from a tax holiday in Singapore which expires in 2001, with a
potential extension to August 2004 if certain cumulative investment levels and
other  conditions  are  met.  Compaq  has  determined  that  the undistributed
earnings  of  its  Singaporean  manufacturing  subsidiary  would be reinvested
indefinitely.  As a result of this determination, no provision for U.S. income
tax  is  reflected  in  Compaq's accounts for the earnings of this subsidiary.
These  earnings  would  become  subject  to  U.S. tax if they were actually or
deemed  to  be  remitted  to  Compaq as dividends or if Compaq should sell its
stock  in  this  subsidiary.  Compaq  estimates an additional tax provision of
approximately  $690  million would be required at such time if the full amount
of  these  accumulated  earnings  became  subject  to  U.S.  tax.
<PAGE>

Deferred  tax assets (liabilities) at December 31, 1997 and 1996 are comprised
of  the  following:

<TABLE>
<CAPTION>

December 31, In millions                                                  1997     1996
=========================================================================================
<S>                                                                      <C>      <C>
Post sales support and warranty accruals. . . . . . . . . . . . . . . .  $  154   $  159 
Receivable allowances . . . . . . . . . . . . . . . . . . . . . . . . .     353      239 
Inventory adjustments . . . . . . . . . . . . . . . . . . . . . . . . .      99      137 
Capitalized research and development costs. . . . . . . . . . . . . . .      95        - 
Loss carryforwards. . . . . . . . . . . . . . . . . . . . . . . . . . .      50      121 
Credit carryforwards. . . . . . . . . . . . . . . . . . . . . . . . . .     119      107 
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     186      282 
                                                                         -------  -------
    Gross deferred tax assets . . . . . . . . . . . . . . . . . . . . .   1,056    1,045 
                                                                         -------  -------
Difference arising from different tax and financial reporting year ends    (254)       - 
Capitalized software. . . . . . . . . . . . . . . . . . . . . . . . . .     (64)     (54)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     (73)     (69)
                                                                         -------  -------
    Gross deferred tax liabilities. . . . . . . . . . . . . . . . . . .    (391)    (123)
                                                                         -------  -------
Deferred tax asset valuation allowance. . . . . . . . . . . . . . . . .    (134)    (121)
                                                                         -------  -------
                                                                         $  531   $  801 
                                                                         =======  =======
</TABLE>


Net  operating  loss  carryforwards will generally expire between 2002 through
2004.    Tax  credit  carryforwards will generally expire between 1998 through
2011.

NOTE  8.    STOCKHOLDERS'  EQUITY  AND  EMPLOYEE  BENEFIT  PLANS

Equity  incentive  plans - At December 31, 1997, there were 230,765,000 shares
of common stock reserved by the Board of Directors for issuance under Compaq's
employee  stock option plans. Options are generally granted at the fair market
value of the common stock at the date of grant and generally vest over four to
five  years.  Options granted under the plans must be exercised not later than
ten  years  from  the  date  of  grant.  Options on 68,415,000, 70,334,000 and
74,010,000  shares were exercisable at December 31, 1997, 1996 and 1995 with a
weighted  average  exercise  price  of  $6.53,  $5.57 and $4.82, respectively.

Compaq  has  a  Stock  Option  Plan  for Non-Employee Directors (the "Director
Plan").  At  December  31,  1997,  there were 4,887,000 shares of common stock
reserved  for  issuance  under the Director Plan. Pursuant to the terms of the
plan,  each  non-employee  director is entitled to receive options to purchase
common  stock  upon initial appointment to the Board (initial grants) and upon
subsequent  reelection  to  the  Board  (annual  grants).  Initial  grants are
exercisable  during the period beginning one year after initial appointment to
the  Board  and  ending  ten years after the date of grant. Annual grants vest
over  two  years and are exercisable thereafter until the tenth anniversary of
the  date  of  grant.  Both  initial grants and annual grants have an exercise
price  equal  to the fair market value of Compaq's common stock on the date of
grant.  Additionally, pursuant to the terms of the Director Plan, non-employee
directors  may  elect  to receive stock options in lieu of all or a portion of
the annual retainer to be earned. Such options are granted at 50% of the price
of  Compaq's  common stock at the date of grant and are exercisable during the
period  beginning one year after the grant date and ending ten years after the
grant  date.  Options  on  2,354,000,  2,714,000  and  2,310,000  shares  were
exercisable under the Director Plan at December 31, 1997, 1996 and 1995 with a
weighted  average  exercise price of $6.36, $4.59 and $3.43, respectively. The
expense  resulting from options granted at 50% of the price of Compaq's common
stock  at  the  grant  date  is charged to operations over the vesting period.
<PAGE>

The  following table summarizes activity under the stock option plans for each
of  the  three  years  ended
December  31,  1997:

<TABLE>
<CAPTION>

                                            Shares                          Weighted Average
                                        In  Thousands    Price Per Share     Price Per Share
=============================================================================================
<S>                                     <C>             <C>                 <C>
OPTIONS OUTSTANDING, DECEMBER 31, 1994        166,966                       $            4.71
 Options granted . . . . . . . . . . .         36,334   $1.30   -   $18.81               9.61
 Options lapsed or canceled. . . . . .         (7,208)                                   6.72
 Options exercised . . . . . . . . . .        (31,796)    0.20   -   18.10               3.51
                                        --------------                                       
OPTIONS OUTSTANDING, DECEMBER 31, 1995        164,296                                    5.94
 Options granted . . . . . . . . . . .         47,406     4.71   -   22.39              14.11
 Options lapsed or canceled. . . . . .        (15,620)                                   8.61
 Options exercised . . . . . . . . . .        (32,720)    0.38   -   13.46               3.50
                                        --------------                                       
OPTIONS OUTSTANDING, DECEMBER 31, 1996        163,362                                    8.53
 Options granted . . . . . . . . . . .         46,184     2.55   -   37.38              27.17
 Options lapsed or canceled. . . . . .         (9,346)                                  11.57
 Options exercised . . . . . . . . . .        (28,770)    0.79   -   25.96               6.26
                                        --------------                                       
OPTIONS OUTSTANDING, DECEMBER 31, 1997        171,430                                   13.63
                                        ==============                                       
</TABLE>


There  were 64,117,000, 100,664,000 and 130,760,000 shares available for grant
under  the  plans  at  December  31,  1997,  1996  and  1995,  respectively.

The  following  table  summarizes  significant  ranges  of  outstanding  and
exercisable  options  at  December  31,  1997:

<TABLE>
<CAPTION>

                             Options Outstanding             Options Exercisable
                   --------------------------------------  -----------------------
                                   Weighted     Weighted                 Weighted
                                    Average      Average                  Average
Ranges of             Shares       Remaining    Exercise      Shares     Exercise
Exercise Prices    In thousands  Life in Years    Price    In thousands    Price
==================================================================================
<S>                <C>           <C>            <C>        <C>           <C>
   under $5.00. .        42,682            4.2  $    3.13        39,348  $    3.02
   5.01 to 10.00.        42,588            7.3       8.59        18,599       8.58
   10.01 to 15.00        18,880            7.8      12.38         6,897      12.29
   15.01 to 20.00        29,202            8.8      15.88         5,575      16.10
   20.01 to 25.00           970            8.7      22.01           191      22.32
   25.01 to 30.00        27,771            9.9      28.20            99      26.34
    over $30.00 .         9,337            9.7      35.96            60      34.23
</TABLE>


Prior  to  the  merger with Compaq, Tandem had an employee stock purchase plan
which entitled employees to purchase Tandem common stock at 85% of fair market
value  as  of  the  first or last trading day for each quarterly participating
period. Employees purchased 726,000, 1,352,000 and 920,000 shares as converted
into  Compaq's  common stock for aggregate proceeds of $9 million, $11 million
and  $11  million,  respectively  in  1997,  1996  and  1995.

The  weighted  average fair value per share of stock based compensation issued
during  1997, 1996 and 1995 was $9.74, $6.55 and $5.09, respectively. The fair
value  was estimated using the Black-Scholes model with the following weighted
average  assumptions:
<PAGE>

<TABLE>
<CAPTION>

                          1997   1996   1995
=============================================
<S>                       <C>    <C>    <C>
Expected life (in years)     4      5      5 
Interest rate. . . . . .   6.0%   6.1%   5.8%
Volatility . . . . . . .  33.3%  44.0%  46.4%
Dividend yield . . . . .   0.2%     -      - 
</TABLE>


Stock  based  compensation  costs  would  have  reduced  pretax  income by $91
million,  $48 million and $12 million in 1997, 1996 and 1995 ($59 million, $31
million  and  $8  million  after tax and $.04, $.02 and $.01 per share) if the
fair  values  of  such  compensation  in  that  year  had  been  recognized as
compensation  expense  on a straight-line basis over the vesting period of the
grant.  The  pro  forma  effect  on  net income for 1997, 1996 and 1995 is not
representative  of  the pro forma effect on net income in future years because
it  does not take into consideration pro forma compensation expense related to
grants  made  prior  to  1995.

Investment  Plans  -  Compaq  has  investment  plans available to all domestic
employees and intended to qualify as deferred compensation plans under Section
401(k)  of  the Internal Revenue Code of 1986. Compaq employees may contribute
to  the plan up to 14% of their salary with a yearly maximum not to exceed the
maximum  allowable by the Internal Revenue Service. Compaq will match employee
contributions  for  an  amount up to 6% of each employee's base salary. Tandem
employees  may contribute up to 18% of their salary with a company match up to
2.5%  of  the employees' earnings. Contributions are invested at the direction
of  the  employee  in  one or more funds or can be directed to purchase common
stock  of  Compaq  at  fair market value. Company contributions generally vest
over  three  years  although  Company contributions for those employees having
five  years  of service vest immediately. Company contributions are charged to
expense  over  their  vesting  period.  Amounts  charged  to  expense were $48
million,  $36  million  and  $30 million in 1997, 1996 and 1995, respectively.

Incentive  Compensation  Plan  - Compaq has an incentive compensation plan for
the  majority of its employees. Payments under the plan are based on 6% of net
income  from  operations,  as  defined,  and are made semiannually. The amount
expensed under the plan was $109 million, $76 million and $59 million in 1997,
1996  and  1995,  respectively.

Stock  Splits  -  On  July  28,  1997  and January 20, 1998, Compaq effected a
five-for-two  and a two-for-one stock split, respectively, both in the form of
a  stock dividend. Shareholders of record as of July 14, 1997 and December 31,
1997  received  three  additional  shares of common stock for every two shares
they owned and one additional share of common stock for every share they owned
on  those  dates,  respectively.    Share  and  per share data for all periods
presented  herein  have  been  adjusted  to  give  effect  to  both  splits.

Dividends  - On October 16, 1997, Compaq announced that the Board of Directors
approved  a cash dividend of $0.015 per share of common stock, or $23 million,
to shareholders of record as of December 31, 1997.  Compaq also made available
to stockholders a dividend reinvestment plan whereby dividends can be directly
reinvested  in  Compaq  stock.
<PAGE>

Direct Stock Purchase Plan - In 1997, Compaq announced a direct stock purchase
plan  whereby investors can purchase stock directly from the Company.  Amounts
purchased  under  this  plan  in  1997  have  not  been  significant.

NOTE  9.    CERTAIN  MARKET  AND  GEOGRAPHICAL  DATA

The Company has subsidiaries in various foreign countries that manufacture and
sell  the  Company's  products  in their respective geographic areas.  Summary
information  with respect to the Company's geographic operations in 1997, 1996
and  1995  follows:

<TABLE>
<CAPTION>

                             United States              Other
In millions                    And Canada    Europe   Countries    Eliminations    Consolidated
================================================================================================
<S>                          <C>             <C>      <C>         <C>             <C>
1997

Sales to customers. . . . .  $       13,431  $ 7,850  $    3,303  $           -   $      24,584 
Intercompany transfers. . .           2,017      311       1,856         (4,184)              - 
                             --------------  -------  ----------  --------------  --------------
                             $       15,448  $ 8,161  $    5,159  $      (4,184)  $      24,584 
                             ==============  =======  ==========  ==============  ==============
Income from operations. . .  $        1,740  $   771  $      336  $          45   $       2,892 
                             ==============  =======  ==========  ==============                
Corporate expenses, net (1)                                                                (134)
                                                                                  --------------
Pretax income                                                                     $       2,758 
                                                                                  ==============
Identifiable assets . . . .  $        4,005  $ 2,223  $    1,556  $          83   $       7,867 
                             ==============  =======  ==========  ==============                
General corporate assets                                                                  6,764 
                                                                                  --------------
Total assets                                                                      $      14,631 
                                                                                  ==============

1996

Sales to customers. . . . .  $       10,654  $ 6,480  $    2,875  $           -   $      20,009 
Intercompany transfers. . .           2,467      380       1,674         (4,521)              - 
                             --------------  -------  ----------  --------------  --------------
                             $       13,121  $ 6,860  $    4,549  $      (4,521)  $      20,009 
                             ==============  =======  ==========  ==============  ==============
Income from operations. . .  $        1,162  $   396  $      332  $          18   $       1,908 
                             ==============  =======  ==========  ==============                
Corporate expenses, net                                                                     (25)
                                                                                  --------------
Pretax income                                                                     $       1,883 
                                                                                  ==============
Identifiable assets . . . .  $        4,532  $ 2,241  $    1,570  $         (93)  $       8,250 
                             ==============  =======  ==========  ==============                
General corporate assets                                                                  4,081 
                                                                                  --------------
Total assets                                                                      $      12,331 
                                                                                  ==============

1995

Sales to customers. . . . .  $        8,256  $ 5,890  $    2,529  $           -   $      16,675 
Intercompany transfers. . .           2,009      330       1,681         (4,020)              - 
                             --------------  -------  ----------  --------------  --------------
                             $       10,265  $ 6,220  $    4,210  $      (4,020)  $      16,675 
                             ==============  =======  ==========  ==============  ==============
Income from operations. . .  $          687  $   740  $      295  $           8   $       1,730 
                             ==============  =======  ==========  ==============                
Corporate expenses, net (1)                                                                (404)
                                                                                  --------------
Pretax income                                                                     $       1,326 
                                                                                  ==============
Identifiable assets . . . .  $        4,980  $ 2,215  $    1,686  $         (97)  $       8,784 
                             ==============  =======  ==========  ==============                
General corporate assets                                                                    853 
                                                                                  --------------
Total assets                                                                      $       9,637 
                                                                                  ==============
<FN>

(1)  Includes  a  $208  million  and a $241 million non-recurring, non-tax-deductible charge for
purchased  in-process technology in connection with acquisitions in 1997 and 1995, respectively,
and  $44  million  of  non-tax-deductible  merger-related  costs  incurred  in  1997.
</TABLE>
<PAGE>

NOTE  10.   COMMITMENTS, CONTINGENCIES, FINANCIAL INSTRUMENTS AND FACTORS THAT
MAY  AFFECT  FUTURE  OPERATIONS

Derivative  financial  instruments  and  fair  value  of financial instruments

Compaq  utilizes  primarily  forward  contracts and purchased foreign currency
options  to  reduce  its  exposure  to  potentially adverse changes in foreign
currency  exchange  rates. Compaq does not hold or issue financial instruments
for  trading  purposes  nor  does  it hold or issue interest rate or leveraged
derivative  financial  instruments.

Compaq's  program to reduce currency exposure associated with the net monetary
assets  of  Compaq's  international  subsidiaries using the U.S. dollar as the
functional currency includes agreements to exchange various foreign currencies
for  U.S.  dollars.  At  December  31,  1997 and 1996, such agreements to sell
foreign  currencies  included  forward  contracts aggregating $1.4 billion and
$1.2  billion,  respectively.  Generally,  gains  and  losses  associated with
currency  rate  changes  on  these forward contracts are recorded currently to
income  and  are reflected in accounts receivable or other current liabilities
in  Compaq's  balance sheet, while the interest element is recognized over the
life  of  each contract. The amount recorded in the balance sheet approximates
the  fair  value of such contracts at December 31, 1997 and 1996. The maturity
dates  of  the  forward  contracts which were outstanding at December 31, 1997
extended  from  two  days  to  six  months.

From  time  to time, Compaq hedges a portion of its anticipated but not firmly
committed  sales  of  its international marketing subsidiaries using purchased
foreign  currency options.  Realized and unrealized gains and the net premiums
on  these  options  are deferred and recognized as a component of sales in the
same  period  that the related sales occur.  Option contracts aggregating $311
million  and  $127  million  were  outstanding  at December 31, 1997 and 1996,
respectively, related to the hedge of such sales for a nine-month period.  The
unrealized  gains  deferred on these contracts were not material. In addition,
Compaq  frequently  utilizes  forward  contracts  to  protect  Compaq from the
effects of currency fluctuations on anticipated but not firmly committed sales
which  are  expected  to  occur  within  a  three-month period.  These forward
contracts  generally do not extend beyond the end of any quarter or year.  Any
gains  or  losses  and  the  interest  element  on these forward contracts are
recognized  as  a  component  of  sales  during  each  quarter.

Compaq  may,  from time to time, hedge commitments for inventory purchases and
capital  expenditures  and other items constituting firm commitments. Any gain
or  loss, if realized, or cost related to these contracts are recorded as part
of inventory or capital items upon acquisition. At December 31, 1997 and 1996,
forward  contracts  related  to these commitments totaled $100 million and $92
million,  respectively.

In  the  event  of a failure to honor one of these forward contracts by one of
the banks with which Compaq has contracted, management believes any loss would
be  limited  to  the exchange rate differential from the time the contract was
made  until  the  time  it  was  compensated.  To the extent Compaq has option
contracts  outstanding,  the  amount  of  any  loss resulting from a breach of
contract  would  be limited to the amount of premiums paid for the options and
the  unrealized  gain,  if  any,  related  to  such  contracts.

Compaq  enters into various other types of financial instruments in the normal
course of business. Fair values for certain financial instruments are based on
quoted  market  prices. For other financial instruments, fair values are based
on  the  appropriate  pricing  models  using  current  market information. The
amounts  ultimately  realized  upon  settlement of these financial instruments
will  depend  on  actual  market  conditions  during the remaining life of the
instruments. Fair values of cash and cash equivalents, short-term investments,
accounts  receivable, accounts payable and other current liabilities reflected
in  the  December  31,  1997  and 1996 consolidated balance sheets approximate
carrying  value  at  these dates. The fair value of Compaq's long-term debt at
December  31,  1996,  was  estimated  to  approximate  the  carrying  value.
<PAGE>

Concentration  of  credit  risk

Compaq's  cash,  cash  equivalents,  short-term  investments  and  accounts
receivable  are subject to potential credit risk. Compaq's cash management and
investment policies restrict investments to low risk, highly-liquid securities
and  Compaq  performs  periodic evaluations of the relative credit standing of
the  financial  institutions  with  which  it  deals.

Compaq  distributes  products primarily through third-party resellers and as a
result,  maintains  individually significant accounts receivable balances from
various  major  resellers.  If the financial condition and operations of these
resellers deteriorate, Compaq's operating results could be adversely affected.
One  customer  accounted  for  11%  of  sales  for  1997  and  12% of accounts
receivable  at  December  31,  1997.  During this period, no other customer of
Compaq  accounted  for  10%  or more of sales.  In 1997, Compaq's five largest
resellers  represented  approximately  25%  of  Compaq's  1997  sales.    The
receivable  balances  from  Compaq's  five  largest  resellers  represented
approximately  32%  of  accounts  receivable  at  December  31,  1997.  Compaq
generally  has  experienced  longer accounts receivable cycles in its emerging
markets,  in  particular  Asia/Pacific and Latin America, when compared to its
U.S.  and  European  markets.  In the event that accounts receivable cycles in
these  developing  markets  lengthen further or one or more of Compaq's larger
resellers in these regions fail, Compaq's operating results could be adversely
affected.

Contingencies

Certain  of  Compaq's resellers finance a portion of their inventories through
third-party  finance companies. Under the terms of the financing arrangements,
Compaq  may  be  required,  in  limited  circumstances,  to repurchase certain
products  from  the  finance  companies.  Additionally, Compaq has on occasion
guaranteed  a  portion  of  certain  resellers'  outstanding  balances  with
third-party  finance  companies  and  financial institutions. Guarantees under
these  and  other  arrangements  were not significant at December 31, 1997 and
1996,  respectively.

Compaq  offers  lease  financing  of  selected  products  to  its  customers.
Sales-type  leases  are  originated by Compaq and either sold on a nonrecourse
basis  or used as collateral for borrowings from certain third-party financial
institutions.  Generally, Compaq receives all proceeds at the inception of the
lease.  The  third-party financial institution assumes the credit risk and the
administrative  responsibility for the collection of the lease receivables. In
the  event of a default by a lessee, the financial institutions' only recourse
is  generally  limited  to  the collaterized computer equipment. Compaq may be
required  to  use  its  "best  efforts"  to  remarket  the computer equipment.

Factors  that  may  affect  future  operations

Compaq  participates  in  a  highly volatile industry that is characterized by
fierce  industry-wide  competition  for  market  share.  Industry participants
confront  aggressive  pricing  practices, continually changing customer demand
patterns,  growing  competition  from  well-capitalized  high  technology  and
consumer  electronics  companies,  and rapid technological development carried
out  in the midst of legal battles over intellectual property rights. Compaq's
operating  results  could  be  adversely  affected  should Compaq be unable to
successfully  integrate  acquired  entities,  anticipate  customer  demand
accurately,  maintain  short  design  cycles  while  meeting evolving industry
performance  standards,  manage  its product transitions, inventory levels and
manufacturing  processes  efficiently,  distribute  its  products  quickly  in
response  to  customer  demand,  differentiate  its products from those of its
competitors  or  compete  successfully  in  the  markets for its new products.
<PAGE>

Significant  numbers  of  components  are purchased from single sources due to
technology,  availability,  price,  quality  or  other  considerations.  Key
components  and  processes  currently  obtained  from  single  sources include
certain of Compaq's displays, microprocessors, application specific integrated
circuits  and  other  custom  chips,  and  certain  processes  relating  to
construction  of  the plastic housing for Compaq's computers. In addition, new
products  introduced  by  Compaq  often  initially  utilize  custom components
obtained  from  only  one source until Compaq has evaluated whether there is a
need  for  additional  suppliers.  In  the  event  that  a  supply  of  a  key
single-sourced  material  process  or  component  were  delayed  or curtailed,
Compaq's  ability  to  ship the related product in desired quantities and in a
timely  manner  could be adversely affected. Compaq attempts to mitigate these
risks  by  working  closely  with  key  suppliers  on product plans, strategic
inventories  and  coordinated  product  introductions.

Litigation

Compaq  is subject to legal proceedings and claims which arise in the ordinary
course of its business. Management does not believe that the outcome of any of
those  matters  will  have  a material adverse effect on Compaq's consolidated
financial  position,  operating  results  or  cash  flows.

Lease  commitments

Compaq  leases certain manufacturing and office facilities and equipment under
noncancelable  operating  leases with terms from one to 30 years. Rent expense
for  1997,  1996  and  1995  was  $135 million, $128 million and $123 million,
respectively.

Compaq's  minimum  rental  commitments under noncancelable operating leases at
December 31, 1997 were: $107 million in 1998, $81 million in 1999, $62 million
in 2000, $54 million in 2001, $45 million in 2002 and $236 million thereafter.

NOTE  11.    SUBSEQUENT  EVENT

On January 26, 1998, Compaq announced the execution of an agreement to acquire
Digital  Equipment  Corporation.  Under  the  terms  of  the  transaction,
shareholders  of  Digital  will receive $30 in cash and 0.945 shares of Compaq
common  stock for each share of Digital stock. Compaq will issue approximately
150  million  shares  of  Compaq  common  stock and $4.8 billion in cash. This
transaction will be accounted for as a purchase. The transaction is subject to
the  approval  of  Digital's shareholders as well as clearance under antitrust
laws  and  other customary closing conditions, and is expected to be completed
in  the  second  quarter  of  1998.
<PAGE>

SELECTED  QUARTERLY  UNAUDITED  FINANCIAL  DATA  (NOT  COVERED  BY  REPORT  OF
INDEPENDENT  ACCOUNTANTS):

The  table  below sets forth selected unaudited financial information for each
quarter  of  the  last  two  years.

<TABLE>
<CAPTION>

                                         1ST       2ND       3RD       4TH
In millions, except per share amounts  QUARTER   QUARTER   QUARTER   QUARTER
=============================================================================
<S>                                    <C>       <C>       <C>       <C>
1997
Sales . . . . . . . . . . . . . . . .  $  5,272  $  5,515  $  6,474  $  7,323
Gross margin. . . . . . . . . . . . .     1,417     1,537     1,777     2,020
Net income(1) . . . . . . . . . . . .       414       257       517       667
Earnings per common share(1)(2)(3)
  Basic . . . . . . . . . . . . . . .  $   0.28  $   0.17  $   0.34  $   0.44
  Diluted . . . . . . . . . . . . . .  $   0.27  $   0.17  $   0.33  $   0.43
1996
Sales . . . . . . . . . . . . . . . .  $  4,626  $  4,471  $  4,947  $  5,965
Gross margin. . . . . . . . . . . . .     1,098     1,155     1,306     1,595
Net income(1) . . . . . . . . . . . .       242       224       365       487
Earnings per common share(1)(2)(3)
  Basic . . . . . . . . . . . . . . .  $   0.17  $   0.16  $   0.25  $   0.33
  Diluted . . . . . . . . . . . . . .  $   0.16  $   0.15  $   0.24  $   0.32
<FN>
Earnings  per common share are computed independently for each of the quarters
presented  and  therefore  may  not  sum  to  the  totals  for  the  year.

All  quarters  have  been  restated  to  reflect  the  merger  with  Tandem.

(1)  Includes  a  $208  million  ($0.13  per  share)  non-recurring,
non-tax-deductible  charge  for  purchased in-process technology in connection
with  the  Microcom  acquisition  in  the  second quarter of 1997, $44 million
($0.03  per  share)  of  expenses  related  to  the Tandem merger in the third
quarter  of  1997  and a restructuring charge of $52 million ($0.02 per share)
for  Tandem  in  the  second  quarter  of  1996.
(2)  The  Company  adopted  FAS  128  in  1997.  All prior period earnings per
common  share  data  have  been  restated to conform to the provisions of this
statement.
(3)  All  per  common  share data reflect the five-for-two stock split in July
1997  and  the  two-for-one  stock  split  in  January  1998.
</TABLE>

PART  III

ITEMS  10  TO  13  INCLUSIVE.

     These items have been omitted in accordance with the general instructions
to  Form  10-K  Annual Report. The Registrant will file with the Commission in
March 1998, pursuant to Regulation 14A, a definitive proxy statement that will
involve  the election of directors and approval of the 1998 Stock Option Plan.
The  information  required  by  these  items  will  be  included in such proxy
statement  and  are  incorporated  herein  by  reference.
<PAGE>

PART  IV

ITEM  14.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

     (a)  The  following  documents  are  filed  as  a  part  of  this report:

     1.          Financial  Statements.

     Report  of  Independent  Accountants
     Consolidated  Balance  Sheet  at  December  31,  1997  and  1996
     Consolidated  Statement  of Income for the three years ended December 31,
       1997
     Consolidated  Statement  of Cash Flows for the three years ended December
       31,  1997
     Consolidated  Statement of Stockholders' Equity for the three years ended
       December  31,  1997
     Notes  to  Consolidated  Financial  Statements
     Schedule  II:  Valuation  and  Qualifying  Accounts.

     2.          Exhibits.

Exhibits  identified  in  parentheses  below,  on file with the Securities and
Exchange  Commission (SEC), are incorporated by reference as exhibits.  Except
as  indicated,  Compaq  filed  these  documents  with  the  SEC.


<TABLE>
<CAPTION>
EXHIBIT
   NO.                               DESCRIPTION OF EXHIBITS
-------                              -----------------------
<C>      <S>
  3.1    Restated Certificate of Amendment.
  3.2    Bylaws (Exhibit No. 3.2 to Form 10-Q for the quarter ended September 30, 1997).
 10.1    1982 Stock Option Plan, as amended (Exhibit 10.1 to Form 10-Q for the quarter ended
         June 30, 1989 ("1989 Second Quarter Form 10-Q")). *
 10.2    1985 Stock Option Plan (Exhibit 10.3 to Form 10-K for the year ended December 31,
         1991 ("1991 Form 10-K")). *
 10.3    1985 Executive and Key Employees Stock Option Plan, as amended (Exhibit 10.3 to
         1989 Second Quarter Form 10-Q). *
 10.4    1985 Nonqualified Stock Option Plan, as amended (Exhibit 10.4 to 1989 Second
         Quarter Form 10-Q). *
 10.5    Forms of Stock Option Agreements relating to Exhibits 10.1 through 10.5 (Exhibit 10.6
         to Form 10-K for the year ended December 31, 1987). *
 10.6    1989 Equity Incentive Plan, as amended. *
 10.7    Form of Stock Option Notice relating to Exhibit 10.6, as amended (Exhibit 10.7 to 1996
         Form 10-K). *
 10.8    1995 Equity Incentive Plan, as amended. *
 10.9    Form of Stock Option Notice relating to Exhibit 10.8, as amended (Exhibit 10.9 to 1996
         Form 10-K). *
10.10    Bonus Incentive Plan (Exhibit 10.11 to Form 10-K for the year ended December 31, 1995). *
10.11    Stock Option Plan for Non-Employee Directors, as amended. *
10.12    Forms of Stock Option Notice relating to Exhibit 10.11 (Exhibit 10.9 to 1996 Form 10-K). *
10.13    Employment Agreement dated as of January 1, 1992 between Compaq and Eckhard
         Pfeiffer (Exhibit 10.15 to 1991 Form 10-K). *
<PAGE>
10.14    Form of letter agreement between Compaq and its executive officers (Exhibit 10.16 to
         1991 Form 10-K). *
10.15    Deferred Compensation and Supplemental Savings Plan (Exhibit 4.1 to Registration
         Statement No. 333-42375 on Form S-8). *
10.16    First Amendment to Deferred Compensation and Supplemental Savings Plan (Exhibit
         4.2 to Registration Statement No. 333-4275 on Form S-8). *
10.17    Form of employment agreement between Tandem Computers, Incorporated and Roel
         Pieper (Exhibit 10.1 to Tandem Computers Incorporated's Form 10-Q for the quarter
         ended June 30, 1995). *
10.18    $1,000,000,000 Credit Agreement dated as of September 22, 1997, among Compaq
         Computer Corporation, the banks signatory thereto and Bank of America National Trust
         and Savings Association, as Administrative Agent.
10.19    $3,000,000,000 Credit Agreement dated as of September 22, 1997, among Compaq
         Computer Corporation, the banks signatory thereto and Bank of America National Trust
         and Savings Association, as Administrative Agent.
   21    Subsidiaries.
   23    Consent of Price Waterhouse LLP, independent accountants.
   27    Financial Data Schedule (EDGAR version only).
<FN>
     *  Indicates  management  contract  or  compensatory  plan  or  arrangement.
</TABLE>

          (b)  Reports  on  Form  8-K.

     Current  Report  on  Form  8-K  filed  January  22,  1997.
     Current  Report  on  Form  8-K  filed  April  10,  1997.
     Current  Report  on  Form  8-K  filed  April  16,  1997.
     Current  Report  on  Form  8-K  filed  May  14,  1997.
     Current  Report  on  Form  8-K  filed  June  24,  1997.
     Current  Report  on  Form  8-K  filed  June  26,  1997.
     Current  Report  on  Form  8-K  filed  July  1,  1997.
     Current  Report  on  Form  8-K  filed  July  11,  1997.
     Current  Report  on  Form  8-K  filed  September  3,  1997.
     Current  Report  on  Form  8-K  filed  October  16,  1997.
     Current  Report  on  Form  8-K  filed  November  21,  1997.
     Current  Report  on  Form  8-K  filed  January  21,  1998.
     Current  Report  on  Form  8-K  filed  January  27,  1998.
     Current  Report  on  Form  8-K  filed  February  11,  1998.



     Compaq,  the  Compaq  logo,  ProLiant,  Deskpro,  Armada,  Compaq Insight
Manager,  LTE, Presario, ProSignia and SmartStart are registered trademarks of
Compaq Computer Corporation. CompaqCare is a registered service mark of Compaq
Computer  Corporation.    WINDOWS  NT is a trademark of Microsoft Corporation.
Other  product  names  mentioned  herein  may  be  trademarks  or  registered
trademarks  of  their  respective  companies.
<PAGE>

                                  SIGNATURES

     Pursuant  to  the  requirements  of Section 13 or 15(d) of the Securities
Exchange  Act of 1934, the Registrant has duly caused this report to be signed
on  its  behalf by the undersigned, thereunto duly authorized on this 17th day
of  February,  1998.

                                  Compaq  Computer  Corporation


                                  By:  /s/ ECKHARD PFEIFFER
                                       -------------------------------
                                       Eckhard Pfeiffer, President and
                                       Chief  Executive  Officer



     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report  has  been  signed  below  by  the  following  persons on behalf of the
Registrant  in  the  capacities  and  on  the  dates  indicated.


<TABLE>
<CAPTION>

         SIGNATURE                          TITLE                      DATE
----------------------------  ---------------------------------  -----------------
<S>                           <C>                                <C>

                              President and Director             February 17, 1998
/s/ ECKHARD PFEIFFER          (principal executive officer)
----------------------------                                                      
  (Eckhard Pfeiffer)
                              Senior Vice President              February 17, 1998
                              and Chief Financial Officer
/s/ EARL L. MASON             (principal financial officer and
----------------------------                                                      
  (Earl L. Mason)             principal accounting officer)


                              Chairman of the                    February 17, 1998
/s/ BENJAMIN M. ROSEN         Board of Directors
----------------------------                                                      
  (Benjamin M. Rosen)


/s/ LAWRENCE T. BABBIO, JR.   Director                           February 17, 1998
----------------------------                                                      
  (Lawrence T. Babbio, Jr.)


/s/ ROBERT TED ENLOE, III     Director                           February 17, 1998
----------------------------                                                      
  (Robert Ted Enloe, III)


/s/ GEORGE H. HEILMEIER       Director                           February 17, 1998
----------------------------                                                      
  (George H. Heilmeier)


/s/ GEORGE E.R. KINNEAR II    Director                           February 17, 1998
----------------------------                                                      
  (George E.R. Kinnear II)
<PAGE>

/s/ PETER N. LARSON           Director                           February 17, 1998
----------------------------                                                      
  (Peter N. Larson)


/s/ KENNETH L. LAY            Director                           February 17, 1998
----------------------------                                                      
  (Kenneth L. Lay)


/s/  THOMAS J. PERKINS        Director                           February 17, 1998
----------------------------                                                      
  (Thomas J. Perkins)


/s/ KENNETH ROMAN             Director                           February 17, 1998
----------------------------                                                      
  (Kenneth Roman)


/s/ LUCILLE S. SALHANY        Director                           February 17, 1998
----------------------------                                                      
  (Lucille S. Salhany)
</TABLE>
<PAGE>

                                                                   SCHEDULE II

<TABLE>
<CAPTION>

                          COMPAQ COMPUTER CORPORATION
                       VALUATION AND QUALIFYING ACCOUNTS


Year ended December 31, In millions      1997    1996    1995
==============================================================
<S>                                     <C>     <C>     <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS
Balance, beginning of period . . . . .  $ 247   $ 118   $  93 
Additions charged to expense . . . . .     19     160      47 
Reductions . . . . . . . . . . . . . .    (23)    (31)    (22)
                                        ------  ------  ------
Balance, end of period . . . . . . . .  $ 243   $ 247   $ 118 
                                        ======  ======  ======

DEFERRED TAX ASSET VALUATION ALLOWANCE
Balance, beginning of period . . . . .  $ 121   $ 119   $ 107 
Additions charged to expense . . . . .     43       9      12 
Reductions . . . . . . . . . . . . . .    (30)     (7)
                                        ------  ------  ------
Balance, end of period . . . . . . . .  $ 134   $ 121   $ 119 
                                        ======  ======  ======

</TABLE>