SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549



                                    FORM 10-Q



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



                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999



                          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)



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  [   ]


The  number  of  shares  of  the  registrant's  Common  Stock,  $.01  par value,
outstanding  as  of  June  30,  1999,  was  approximately  1.7  billion.

<PAGE>
                         PART I.  FINANCIAL INFORMATION

ITEM  1.  FINANCIAL  STATEMENTS

<TABLE>
<CAPTION>
                                  COMPAQ COMPUTER CORPORATION
                                   CONSOLIDATED BALANCE SHEET
                                          (UNAUDITED)




                                                                      JUNE 30,    DECEMBER 31,
(In millions, except par value)                                         1999          1998
===============================================================================================
<S>                                                                  <C>         <C>
ASSETS

Current assets:
   Cash and cash equivalents                                         $    2,855  $        4,091
   Accounts receivable, net                                               6,556           6,998
   Inventories                                                            2,224           2,005
   Deferred income taxes                                                  1,382           1,602
   Other current assets                                                     451             471
                                                                     ----------  --------------
        Total current assets                                             13,468          15,167
Property, plant and equipment, less accumulated depreciation              3,018           2,902
Deferred income taxes                                                     1,762           1,341
Intangible and other assets                                               4,177           3,641
                                                                     ----------  --------------
                                                                     $   22,425  $       23,051
                                                                     ==========  ==============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Accounts payable                                                  $    4,152  $        4,237
   Income taxes payable                                                     385             282
   Accrued restructuring costs                                              713           1,110
   Other current liabilities                                              5,126           5,104
                                                                     ----------  --------------
        Total current liabilities                                        10,376          10,733
                                                                     ----------  --------------
Postretirement and other postemployment benefits                            524             545
                                                                     ----------  --------------
Minority interest                                                             -             422
                                                                     ----------  --------------
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:
       1,709 million and 1,693 million shares at June 30, 1999 and
       1,698 million and 1,687 million shares at December 31, 1998)       7,520           7,270
    Retained earnings                                                     4,552           4,501
    Accumulated comprehensive income (loss)                                   5            (36)
    Treasury stock (at cost)                                              (552)           (384)
                                                                     ----------  --------------
       Total stockholders' equity                                        11,525          11,351
                                                                     ----------  --------------
                                                                     $   22,425  $       23,051
                                                                     ==========  ==============
</TABLE>

             See accompanying notes to consolidated financial data.

                                        2
<PAGE>
<TABLE>
<CAPTION>
                                 COMPAQ COMPUTER CORPORATION
                              CONSOLIDATED STATEMENT OF INCOME
                                         (UNAUDITED)



                                                   SIX MONTHS ENDED         QUARTER ENDED
                                                        JUNE 30,              JUNE 30,
                                                  --------------------  --------------------
(In millions, except per share amounts)            1999       1998         1999       1998
============================================================================================

<S>                                               <C>      <C>          <C>        <C>
<S>                                               <C>      <C>          <C>        <C>

Revenue:
    Products                                      $15,600  $  10,947   $   7,781  $   5,372
    Services                                        3,239        572       1,639        460
                                                  -------  -----------  ---------  ---------
        Total revenue                              18,839     11,519       9,420      5,832
                                                  -------  -----------  ---------  ---------

Cost of sales:
    Products                                       12,338      9,007       6,331      4,406
    Services                                        2,238        379       1,153        316
                                                  -------  -----------  ---------  ---------
        Total cost of sales                        14,576      9,386       7,484      4,722
                                                  -------  -----------  ---------  ---------


Selling, general and administrative expense         3,209      1,836       1,732      1,051
Research and development costs                        870        494         466        249
Purchased in-process technology                         -      3,234           -      3,234
Restructuring and asset impairment charges              -        393           -        393
Other income and expense, net                          42        (74)          8        (44)
                                                  -------  -----------  ---------  ---------
                                                    4,121      5,883       2,206      4,883
                                                  -------  -----------  ---------  ---------
Income (loss) before provision for income taxes       142     (3,750)       (270)    (3,773)
Provision (benefit) for income taxes                   45       (134)        (86)      (141)
                                                  -------  -----------  ---------  ---------
Net income (loss)                                 $    97  $  (3,616)  $    (184)  $ (3,632)
                                                  =======  ==========  =========  ==========


Earnings (loss) per common share:
          Basic                                   $  0.07  $ (2.35  )  $(0.10  )  $ (2.33  )
                                                  =======  ==========  =========  ==========
          Diluted                                 $  0.07  $ (2.35  )  $(0.10  )  $ (2.33  )
                                                  =======  ==========  =========  ==========


Shares used in computing earnings (loss) per
    common share:
          Basic                                     1,691       1,539      1,693       1,556
                                                  =======  ==========  =========  ==========
          Diluted                                   1,741       1,539      1,693       1,556
                                                  =======  ==========  =========  ==========
</TABLE>

             See accompanying notes to consolidated financial data.

                                        3
<PAGE>
<TABLE>
<CAPTION>
                             COMPAQ COMPUTER CORPORATION
                        CONSOLIDATED STATEMENT OF CASH FLOWS
                                     (UNAUDITED)



                                                                  SIX MONTHS ENDED
                                                                       JUNE 30,
                                                               ----------------------
(In millions)                                                     1999        1998
=====================================================================================
<S>                                                            <C>         <C>
Cash flows from operating activities:
   Net income  (loss)                                          $      97  $  (3,616)
   Adjustments to reconcile net income to net cash
   provided by operating activities:
   Depreciation and amortization                                     728         272
   Purchased in-process technology                                     -       3,234
   Restructuring and asset impairment charges                          -         393
   Deferred income taxes                                            (281)          -
   Gain on sale of  assets                                           (26)          -
   Changes in operating assets and liabilities, net of
   effects of purchased businesses:
     Accounts receivable                                             306        (221)
     Inventories                                                    (227)        644
     Other current assets                                             22          17
     Accounts payable                                                (92)         (9)
     Income taxes payable                                            103        (128)
     Accrued restructuring costs                                    (397)        (10)
     Other current liabilities                                        79         (43)
                                                               -----------  ---------
     Net cash provided by operating activities                       312         533
                                                               -----------  ---------
Cash flows from investing activities:
 Purchases of property, plant and equipment, net                    (507)       (257)
 Proceeds from sales of short-term investments                         -         344
 Acquisition of businesses, net of cash acquired                    (514)     (1,413)
 Proceeds from sale of assets                                         70           -
 Issuance of note receivable                                        (225)          -
 Other, net                                                           39        (314)
                                                               -----------  ---------
     Net cash used in investing activities                        (1,137)     (1,640)
                                                               -----------  ---------
Cash flows from financing activities:
 Payments to retire Digital preferred stock                         (400)          -
 Payments to retire debt                                               -        (788)
 Purchase of treasury shares                                        (168)        (26)
 Issuance of common stock pursuant to stock option plans             124          94
 Tax benefit associated with stock options                            94           -
 Dividends paid                                                      (68)        (46)
                                                               -----------  ---------
   Net cash used in financing activities                           (418)        (766)
                                                               -----------  ---------
Effect of exchange rate changes on cash and cash equivalents           7          51
                                                               ---------  ----------
 Net decrease in cash and cash equivalents                       (1,236)      (1,822)
Cash and cash equivalents at beginning of period                   4,091       6,418
                                                               -----------  ---------
Cash and cash equivalents at end of period                     $   2,855    $  4,596
                                                               ===========  =========
</TABLE>

             See accompanying notes to consolidated financial data.

                                        4
<PAGE>
                           COMPAQ COMPUTER CORPORATION

                      NOTES TO CONSOLIDATED FINANCIAL DATA

NOTE  1  -  BASIS  OF  PRESENTATION
-----------------------------------

     The  accompanying unaudited consolidated financial data for Compaq Computer
Corporation  as  of  June 30, 1999 and December 31, 1998 and for the three month
and  six  month  periods  ended  June  30,  1999  and 1998 have been prepared on
substantially  the  same  basis  as  Compaq's  annual  consolidated  financial
statements.  In  Compaq's opinion, the data reflects all adjustments, consisting
only  of  normal recurring adjustments, necessary for a fair presentation of the
results  for  those  periods  and  the  financial condition at those dates.  The
consolidated  results  for  interim  periods  are  not necessarily indicative of
results  to  be  expected  for  the  full  year.  The  accompanying  unaudited
consolidated  financial  data should be read in conjunction with Compaq's Annual
Report  on  Form  10-K  for  the  year  ended  December  31,  1998.

     Compaq  completed  the acquisition of Digital Equipment Corporation in June
1998,  the  acquisition of Shopping.com in February 1999, and the acquisition of
Zip2 Corporation in April 1999.  These acquisitions were accounted for under the
purchase  method  of accounting.  Accordingly, the results of operations and the
estimated  fair market value of the assets acquired and liabilities assumed were
included  in  Compaq's  financial  statements  from  the  dates  of acquisition.

NOTE  2  -  ACQUISITIONS  AND  DIVESTITURES
-------------------------------------------

     In June 1999,  Compaq  entered  into  an agreement to exchange the majority
portion  of  its  ownership  in  the  AltaVista  business  and two subsidiaries,
Shopping.com  and  Zip2  for stock and a note of CMGI.  Compaq will retain 18.5%
Equity ownership (17% on a fully diluted basis) in AltaVista.  In return, Compaq
will receive 19 million CMGI common shares and CMGI preferred shares convertible
into 1.8  million  CMGI common shares,  which combined,  would represent a 17.9%
equity  stake  (16.4% on a fully diluted basis) in CMGI.  In addition, CMGI will
issue a $220 million three-year note to Compaq, bringing total consideration for
CMGI's 81.5% ownership  in  the AltaVista business to approximately $2.3 billion
based upon the price of CMGI stock at the date of the agreement.  The agreement,
subject  to normal regulatory approvals, is binding on both parties and does not
require shareholder approval for the closing.  The transaction is expected to be
completed  in  the  third  quarter  of 1999.  The net assets of these operations
approximates  $750 million, consisting primarily of goodwill.  Compaq expects to
recognize  a significant one-time gain on this transaction in the third quarter.
The  amount of the gain will be dependent on the value of the CMGI shares on the
date  the  transaction  is  consummated.

     In April 1999, Compaq completed a cash tender offer for Zip2, a provider of
Internet  platform solutions for media companies and local e-commerce merchants.
The  aggregate purchase price of $341 million consisted of $307 million in cash,
the  issuance  of employee stock options to purchase AltaVista stock with a fair
value  of $28 million and other acquisition costs.  The aggregate purchase price
has  been  allocated  to the assets acquired and liabilities assumed, consisting
primarily of goodwill in the amount of $349 million that is being amortized over
a  three  year  period.  Pro  forma  statements  of  operations  reflecting  the
acquisition  of  Zip2  are  not  shown  as they would not differ materially from
reported  results.

     In February 1999, Compaq completed a cash tender offer for Shopping.com, an
on-line  retailer  that  offers Internet shoppers an array of consumer products.
The  aggregate purchase price of $257 million consisted of $219 million in cash,
the  issuance  of  employee  stock  options with a fair value of $32 million and
other  acquisition  costs.   The  aggregate purchase price has been allocated to
the assets acquired and liabilities assumed, consisting primarily of goodwill in
the  amount  of  $288  million that is being amortized over a three year period.
Pro  forma  statements  of operations reflecting the acquisition of Shopping.com
are  not  shown  as  they  would  not  differ  materially from reported results.

                                        5
<PAGE>
     In  June  1999,  Compaq  sold certain network switching assets.  Total cash
proceeds  were  $70 million and Compaq realized a pretax gain on the sale of $26
million, recorded as other income.  The assets sold consisted of property, plant
and  equipment,  and  intangibles.

     In  June 1999, Compaq Financial Services ("CFS"), a wholly-owned subsidiary
of  Compaq,  issued  notes  receivable  in the amount of $225 million to leasing
companies  in  which  CFS has a joint 50% ownership interest.  Additionally, CFS
entered  into  an  agreement to acquire the remaining 50% interest  of its joint
venture  partner.  The  agreement  is  subject  to  regulatory  approval.  The
transaction  is  expected  to  be  completed  during  the  third  quarter.

NOTE  3  -  RESTRUCTURING  ACTIONS
----------------------------------

     In  June  1999,  Compaq  announced  it  expects  to  take  a  substantial
restructuring  charge  in the third quarter.  This charge is associated with the
realignment  of  the organization to better meet customer needs and achieve cost
structures appropriate to the target markets.  The plans are being developed and
are  expected  to  be  completed  in  the third quarter.  The expected charge is
estimated  to  range  from  $700 million to $900 million,  which  will include a
headcount reduction of approximately 6,000 to 8,000  employees  and some related
facility  closings.

     In June 1998,  management  approved  restructuring  plans to integrate  the
operations  of Compaq and Digital.  The accrued  restructuring  costs related to
these  plans  include  the cost of  involuntary  employee  separation  benefits,
consolidation  of  duplicative  facilities,  the  cost  of  terminating  Digital
contractual  obligations  and relocation  costs of Digital  employees.  Employee
separation benefits include severance, medical and other benefits. Restructuring
costs  related to Digital were  recorded as a component  of the  purchase  price
allocation and costs related to Compaq were charged to operations.

     The  cost  of   employee   separations   associated   with  the  June  1998
restructuring  plan included  separation  benefits  estimated for  approximately
12,400  Digital  employees  and 5,000  Compaq  employees.  Employee  separations
included the majority of business functions,  job classes and geographies,  with
most of the reductions  occurring in North America and Europe. The restructuring
plans also included  costs  associated  with the closure of 13.2 million  square
feet of office,  distribution  and  manufacturing  space,  principally  in North
America  and Europe.  Compaq has  completed  most of the actions  related to the
restructuring  plans.  Compaq  believes the  remaining  reserve is sufficient to
complete the remaining actions under the plan.

     The  accrued  restructuring costs and amounts charged against the provision
as  of  June  30,  1999,  are  as  follows:

<TABLE>
<CAPTION>
                                         DECEMBER 31,          CASH        JUNE 30,
                                             1998           EXPENDITURES     1999
                                      ------------------  --------------  ---------
                                                          (IN MILLIONS)
<S>                                   <C>                 <C>             <C>
Employee separations                  $              723  $        (336)  $     387
Facility closure costs                               317            (45)        272
Relocation                                            43             (6)         37
Other exit costs                                      27            (10)         17
                                      ------------------  --------------  ---------
   Total accrued restructuring costs  $            1,110  $        (397)  $     713
                                      ==================  ==============  =========
</TABLE>

     The total  accrued  restructuring  cost of $713  million  at June 30,  1999
includes  amounts for actions that have  already been taken,  but for which cash
expenditures have not yet been made.  Approximately  $200 million of the accrual
at June 30, 1999 relates to future cash payments to employees separated prior to
June 30, 1999.

                                        6
<PAGE>
     For  the  six  months  ended  June  30,  1999,  employee separations due to
restructuring  actions  totaled  3,850.  The net headcount reduction for the six
months  ended  June  30,  1999, including attrition and restructuring, offset by
hiring, totaled approximately 1,800.  Since the date of the Digital acquisition,
employee  separations  due  to  restructuring  actions  were  14,400.  The  net
headcount  reduction  since  the  date  of  the  Digital  acquisition, including
attrition  and  restructuring,  offset  by  hiring,  was  approximately  14,500.

NOTE  4  -  INVENTORIES
-----------------------

     Inventories  consisted  of  the  following:

<TABLE>
<CAPTION>
                   JUNE 30,   DECEMBER 31,
                     1999         1998
                   ---------  -------------
                       (IN MILLIONS)
<S>                <C>        <C>
 Raw materials     $     469  $         404
 Work in progress        454            403
 Finished goods        1,301          1,198
                   ---------  -------------
                   $   2,224  $       2,005
                   =========  =============
</TABLE>

NOTE  5  -  MARKETABLE  EQUITY  INVESTMENTS
-------------------------------------------

     Compaq  holds  certain  minority  equity  investments  in  companies having
operations  or technology in areas within Compaq's strategic focus.  At June 30,
1999, certain of the minority equity investments are classified as available for
sale  securities.  The fair value of these investments at June 30, 1999 was $109
million.  The  unrealized  gain on the investments was approximately $99 million
($65  million,  net  of  tax).

NOTE  6  -  REDEMPTION  OF  DIGITAL  PREFERRED  STOCK
-----------------------------------------------------

     In  April  1999,  Compaq  redeemed  four  million outstanding shares of the
Digital  Series  A 8-7/8% Cumulative Preferred Stock, par value $1.00 per share.
The  redemption  price was $400 million, plus accrued and unpaid dividends of $9
million.  Compaq  realized  a  gain  of  $22  million on the redemption that was
recorded  directly  to  retained  earnings.

NOTE  7  -  TREASURY  STOCK
---------------------------

     Compaq  repurchased  approximately  five  million  common shares in the six
months  ended  June  30,  1999  for a cost of approximately $168 million under a
systematic  stock  repurchase  program.

NOTE  8  -  OTHER  INCOME  AND  EXPENSE
---------------------------------------

     Other  income  and  expense  consisted  of  the  following:

<TABLE>
<CAPTION>
                               SIX MONTHS ENDED   QUARTER ENDED
                                   JUNE 30,          JUNE 30,
                              -----------------  ----------------
                               1999      1998     1999     1998
                              -------  --------  -------  -------
                                (IN MILLIONS)     (IN MILLIONS)
<S>                           <C>      <C>       <C>      <C>
Interest and dividend income  $  (84)  $  (171)  $  (32)  $  (86)
Interest expense associated         5        2        4        3
 with hedging
Other interest expense             70       75       30       35
Currency (gains) losses, net       34       (2)       3       (6)
Minority interest dividend          9        1        -        1
Other, net                          8       21        3        9
                              -------  --------  -------  -------
                              $    42  $   (74)  $    8  $   (44)
                              =======  ========  =======  =======
</TABLE>

                                        7
<PAGE>
NOTE  9  -  COMPREHENSIVE  INCOME
---------------------------------

     Comprehensive  income  is comprised of two components: net income and other
comprehensive  income.  Other comprehensive income refers to revenues, expenses,
gains  and  losses  that  under  generally  accepted  accounting  principles are
recorded as an element of stockholders' equity and are excluded from net income.
The  components  of  comprehensive  income,  net  of  tax,  are  listed  below:

<TABLE>
<CAPTION>
                                      SIX MONTHS ENDED       QUARTER ENDED
                                           JUNE 30,             JUNE 30,
                                     -------------------  --------------------
                                      1999       1998       1999       1998
                                     -------  ----------  --------  ----------
                                         (IN MILLIONS)     (IN MILLIONS)
<S>                                  <C>      <C>         <C>       <C>
Net income (loss)                    $   97   $  (3,616)  $  (184)  $  (3,632)
Other comprehensive income (loss):
  Foreign currency translations         (24)         (5)      (11)         (2)
  Unrealized gains on investments        65           -        65           -
                                     -------  ----------  --------  ----------
Comprehensive income (loss)          $  138   $  (3,621)  $  (130)  $  (3,634)
                                     =======  ==========  ========  ==========
</TABLE>

NOTE  10  -  EARNINGS  PER  COMMON  SHARE
-----------------------------------------

     Basic  earnings  per  common  share  is computed using the weighted average
number  of  common  shares  outstanding during the period.  Diluted earnings per
common  share  is  computed  using  the  combination  of  dilutive  common share
equivalents  and the weighted average number of common shares outstanding during
the  period.  Incremental  shares of 39 million were not used in the calculation
of  diluted loss per share for the three months ended June 30, 1999 due to their
antidilutive  effect.  Incremental  shares  of  50  million  were  used  in  the
calculation  of  diluted  earnings  per  share for the six months ended June 30,
1999.  Incremental  shares  of  59  million  and 60 million were not used in the
calculation  of  diluted  loss per share for the three and six months ended June
30,  1998,  respectively,  due  to  their  antidilutive  effect.

     Stock  options to purchase 47 million and 11 million shares of common stock
for  the  six month periods and 75 million and 13 million shares of common stock
for  the  three  month  periods ended June 30, 1999 and 1998, respectively, were
outstanding  but  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  shares.

     The gain of $22 million realized on the redemption of the Digital preferred
stock  has  been  recorded  directly  to  retained  earnings. In accordance with
Generally  Accepted  Accounting Principles, such gain was added to net income in
the  calculation  of  earnings per share.

     The  following  table  illustrates  the  calculation of earnings per common
share:

<TABLE>
<CAPTION>
                                                              SIX MONTHS ENDED       QUARTER ENDED
                                                                  JUNE 30,              JUNE 30,
                                                             ------------------  ---------------------
                                                              1999      1998       1999        1998
                                                             ------  ----------  ---------  ----------
                                                                (IN MILLIONS)       (IN MILLIONS)
<S>                                                          <C>     <C>         <C>        <C>
Net income (loss)                                            $   97  $  (3,616)  $   (184)  $  (3,632)
Plus:  Gain on redemption of preferred stock
                                                                 22          -         22           -
                                                             ------  ----------  ---------  ----------
Net income (loss) available to common shareholders
                                                             $  119  $  (3,616)  $   (162)  $  (3,632)
                                                             ======  ==========  =========  ==========
Shares used in computing earnings (loss) per common share:
  Basic                                                       1,691      1,539      1,693       1,556
                                                             ======  ==========  =========  ==========
  Diluted                                                     1,741      1,539      1,693       1,556
                                                             ======  ==========  =========  ==========

Earnings (loss) per common share:
  Basic                                                      $ 0.07  $   (2.35)  $  (0.10)  $   (2.33)
                                                             ======  ==========  =========  ==========
  Diluted                                                    $ 0.07  $   (2.35)  $  (0.10)  $   (2.33)
                                                             ======  ==========  =========  ==========
</TABLE>

                                        8
<PAGE>
NOTE  11  -  SEGMENT  DATA
--------------------------

     During the periods reported, Compaq managed its business segments primarily
on  a  geographic  basis.  Compaq's  reportable  segments are comprised of North
America  and  Europe,  Middle  East  and  Africa (EMEA).  Other segments include
Japan,  Greater  China,  Asia  Pacific  and  Latin  America.

     In  June  1999,  Compaq  announced  a  plan for realignment of its business
structure  to  enhance the execution of its strategy including the establishment
of  three  global business groups: Enterprise Solutions and Services, Commercial
Personal  Computing  and  Consumer.  Each  group  will  have  its  own  separate
operating statement.  Compaq  expects to begin  to disclose  segment information
based on the global business groups beginning with the third quarter results.

     Compaq  evaluates  the performance of its segments based on segment profit.
Segment  profit for each segment includes sales and marketing expenses and other
overhead charges directly attributable to the segment and excludes expenses that
are  managed  outside the business segments.  Costs excluded from segment profit
primarily  consist  of  corporate expenses and income taxes.  Corporate expenses
include  research  and  development  costs, certain costs related to the Digital
integration,  corporate  marketing  costs  and  other general and administrative
expenses.  Compaq  does  not include intercompany transfers between segments for
management  reporting  purposes.  Services  revenue is presented on a management
reporting  basis  and  includes  $291  million of products revenue that consists
primarily  of spare parts and third-party product sales for the six months ended
June  30,  1999  and  $151  million  for  the  quarter  ended  June  30,  1999.

     Summary  information  by  segment  is  as  follows:

<TABLE>
<CAPTION>
                  SIX MONTHS ENDED  QUARTER ENDED
                       JUNE 30,       JUNE 30,
(IN MILLIONS)        1999    1998    1999    1998
=================================================
<S>                <C>     <C>     <C>     <C>
NORTH AMERICA:
  Revenue:
    Products       $7,541  $5,167  $3,841  $2,424
    Services        1,233     196     631     151
  Gross margin:
    Products        1,717     727     801     517
    Services          510      81     261      56
  Segment profit    1,263      62     553     130
------------------------------------------------
EMEA:
  Revenue:
    Products       $5,567  $4,182  $2,614  $2,038
    Services        1,633     226     818     193
  Gross margin:
    Products        1,277   1,028     541     509
    Services          504      82     252      60
  Segment profit      999     592     398     240
------------------------------------------------
OTHER SEGMENTS:
  Revenue:
    Products       $2,201  $1,601  $1,175  $  915
    Services          664     147     341     112
  Gross margin:
    Products          499     346     264     199
    Services          223      27     111      19
  Segment profit      280      78     153      50
------------------------------------------------
</TABLE>

                                        9
<PAGE>
     A  reconciliation  of  Compaq's  segment  gross margin and  segment  profit
to the corresponding  consolidated  amounts  is  as  follows:

<TABLE>
<CAPTION>
                                           SIX MONTHS ENDED        QUARTER ENDED
                                               JUNE 30,               JUNE 30,
(IN MILLIONS)                               1999      1998      1999      1998
=====================================================================================
<S>                                    <C>         <C>         <C>         <C>
Segment gross margin                   $   4,730  $    2,291  $    2,230  $    1,360
Non-segment gross margin (1)                (467)       (158)       (294)       (250)
                                       ----------  ----------  ----------  ----------
  Total gross margin                   $   4,263  $    2,133  $    1,936  $    1,110
                                       ==========  ==========  ==========  ==========
Segment profit                         $   2,542  $      732  $    1,104  $      420
Corporate expenses, net                   (2,400)     (4,482)     (1,374)     (4,193)
  Income (loss) before provision for   ----------  ----------  ----------  ----------
  income taxes                         $     142   $  (3,750)  $    (270)  $  (3,773)
                                       ==========  ==========  ==========  ==========
<FN>
(1)  Non-segment gross margin primarily relates to manufacturing and services amounts
not  allocated  to  the  geographic  segments  on  a  management  reporting  basis.
</TABLE>

NOTE  12  -  LITIGATION
-----------------------

General  Litigation

     Compaq  is  subject  to  legal  proceedings  and  claims  that arise in the
ordinary  course  of  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.

Class  Action  Litigation

     Compaq  is  subject  to  a number of shareholder class action claims.  Five
purported class action lawsuits of all persons who purchased Compaq common stock
from  July  10, 1997 through March 6, 1998, have been consolidated in the United
States District Court for the Southern District of Texas, Houston Division.  The
named  defendants  for  these actions include Compaq and some of its current and
former  officers  and  directors.  The  complaints  allege  that  the defendants
violated  federal  securities  laws  by  withholding  information  and  making
misleading  statements  about  channel inventory and factoring of receivables in
order  to  inflate the market price of Compaq's common stock, and further allege
that  a  number  of  individual  defendants  sold  Compaq  common stock at these
inflated prices.  Lead counsel for the plaintiff has been appointed.  Plaintiffs
filed  a consolidated amended complaint on March 16, 1999. The plaintiffs in the
above actions seek monetary damages, interest, costs and expenses.  Compaq filed
a  motion to dismiss on May 18, 1999.  The plaintiffs filed a memorandum of laws
in  opposition  to  the  motion  to  dismiss  on  August  10,  1999.

     A  number  of  purported  class  actions were filed in March and April 1999
against  Compaq in the United States District Court for the Southern District of
Texas,  Houston Division.  These actions name Compaq and a number of its current
and former executive officers as defendants and are purported to be on behalf of
persons  who  purchased  Compaq stock from January 27, 1999 through February 25,
1999, or from January 27, 1999 through April 9, 1999.  The actions assert claims
under  federal  securities laws.  The complaints allege that defendants inflated
the  price  of  Compaq  stock  by  making  false and misleading statements about
Compaq's  revenue  and further allege that a number of current and former Compaq
officers  sold  Compaq  stock  at  these inflated prices.  The plaintiffs in the
above  actions  seek  monetary  damages,  interest,  costs  and  expenses.

                                       10
<PAGE>
     Several  purported  class action lawsuits were filed against Digital during
1994  alleging  violations  of  federal  securities  laws  arising  from alleged
misrepresentations  and  omissions in connection with Digital's sale of Series A
8-7/8%  Cumulative  Preferred  Stock  and  Digital's  financial  results for the
quarter  ended  April 2, 1994.  During 1995, the lawsuits were consolidated into
three  cases, which were pending before the United States District Court for the
District  of  Massachusetts.  On August 8, 1995, the Massachusetts federal court
granted the defendants' motion to dismiss all three cases in their entirety.  On
May  7,  1996, the United States Court of Appeals for the First Circuit affirmed
in part and reversed in part the dismissal of two of the cases, and remanded for
further  proceedings.  The  parties  are  proceeding  with  discovery.

     Compaq  believes  these suits are without merit and intends to defend these
suits  vigorously.

                                       11
<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF  OPERATIONS

     The  following  discussion  should  be  read  in  conjunction  with  the
consolidated  interim  financial  data.

RESULTS  OF  OPERATIONS

     The  following table presents, as a percentage of revenue, certain selected
financial data for the three and six month periods ended June 30, 1999 and 1998,
with  products and services cost of sales and gross margin shown as a percentage
of  their  corresponding  revenue.

<TABLE>
<CAPTION>
                                                   SIX MONTHS ENDED      QUARTER ENDED
                                                        JUNE 30,            JUNE 30,
                                                  ------------------  -------------------
                                                   1999      1998       1999      1998
                                                  -------  ---------  --------  ---------
<S>                                               <C>      <C>        <C>       <C>
Revenue:
 Products                                           82.8%     95.0 %    82.6 %     92.1 %
 Services                                           17.2       5.0      17.4        7.9
                                                  -------  ---------  --------  ---------
Total revenue                                      100.0     100.0     100.0      100.0
Cost of sales:
 Products                                           79.1      82.3      81.4       82.0
 Services                                           69.1      66.3      70.3       68.7
Total cost of sales                                 77.4      81.5      79.5       81.0
Gross margin:
 Products                                           20.9      17.7      18.6       18.0
 Services                                           30.9      33.7      29.7       31.3
Total gross margin                                  22.6      18.5      20.5       19.0
Selling, general and administrative expenses        17.0      15.9      18.4       18.0
Research and development costs                       4.6       4.3       4.9        4.3
Purchased in-process technology(1)                     -      28.1         -       55.5
Restructuring and asset impairment charges(2)          -       3.4         -        6.7
Other income and expense, net                        0.2      (0.6)      0.1       (0.8)
                                                  -------  ---------  --------  ---------
                                                    21.8      51.1      23.4       83.7
                                                  -------  ---------  --------  ---------
Income (loss) before provision for income taxes      0.8%    (32.6)%    (2.9)%    (64.7)%
                                                  =======  =========  ========  =========
<FN>

(1)     Represents  a $3.2 billion non-recurring, non-tax-deductible charge in the second
quarter  of  1998  in  connection  with  the  Digital  acquisition.
(2)     Represents  a  $393 million charge for restructuring and asset impairments in the
second  quarter  of  1998  in  connection  with  the  Digital  acquisition.
</TABLE>



OVERVIEW

     The  six  months and quarter ended June 30, 1999 reflect significant growth
primarily  as  a  result  of  the  acquisition  of  Digital  in  June 1998.  The
acquisition  was  accounted  for  under  the  purchase  method  of  accounting.
Accordingly, the  results  of operations  and the estimated fair market value of
the assets  acquired and liabilities assumed were included in Compaq's financial
statements from  the  date  of  acquisition.   The business issues that affected
the first quarter  of  1999  continued  to  influence the  operating  results in
the second quarter.  These factors include significant pricing  pressures in the
PC industry, inadequate revenue growth and a non-competitive cost-structure.

     Comparatively,  the  six  months  and  quarter  ended  June  30,  1998 were
negatively  impacted  by significant price reductions and promotional activities
in  the  North  America market.  Also, comparatively, the second quarter of 1998
was  negatively affected  by the transition in Compaq's business model to reduce
channel inventories.

                                       12
<PAGE>
REVENUE

     Revenue  for  the six months and quarter ended June 30, 1999 increased $7.3
billion  or 63.5% and $3.6 billion or 61.5% over the comparable periods in 1998,
driven by the acquisition of Digital as well as by growth in previously existing
business  areas.

     Products  revenue  for  the  six  months  and  quarter  ended June 30, 1999
increased approximately $4.7 billion or 42.5% and $2.4 billion or 44.8% over the
comparable  periods  in  1998.  Products  revenue  in 1999 reflected a growth in
worldwide  unit  sales  of 37.8% and 51.8% over the six months and quarter ended
June  30,  1998.  Growth in options revenue was 51.1% and 70.0% in 1999 compared
to  the  comparable  periods  of  1998.  The  increase  in  products revenue was
primarily  due  to the acquisition of Digital as well as unit growth achieved in
previously  existing  business  areas, partially offset by increased competitive
pricing.

     Products  revenue  for  North  America  grew $2.4 billion or 45.9% and $1.4
billion  or  58.5%  for  the  six  months  and second quarter of 1999 over 1998.
Products  revenue in North America represented 49.3% and 50.3% of total products
revenue  in  the  six  months  and second quarter of 1999 and 47.2% and 45.1% of
total  products  revenue  in  the  comparable periods of 1998.  Products revenue
growth  in  1999  primarily  related to the acquisition of Digital and growth in
commercial  desktops,  industry standard servers, storage and consumer products.

     Products  revenue  for  Europe,  Middle  East  and  Africa (EMEA) grew $1.4
billion or 33.1% and $576 million or 28.3% for the six months and second quarter
of  1999  over  1998.  Products  revenue  in EMEA represented 36.4% and 34.3% of
total  products  revenue  in the six months and second quarter of 1999 and 38.2%
and 37.9% of total products revenue in the comparable periods of 1998.  Products
revenue  growth  in  1999  was  due  primarily to the acquisition of Digital and
year-over-year  growth  in  commercial  desktops,  industry standard servers and
consumer  products.  This  growth  was  partially  offset by short-term business
disruptions  related to significant restructuring efforts in Germany and France.

     Services  revenue  for  the six months and second quarter of 1999 increased
approximately  $2.7 billion and $1.2 billion over the comparable periods of 1998
primarily  due  to  the  acquisition  of  Digital.  Services revenue for the six
months  and  second  quarter  of 1998 included only two weeks of Digital service
revenue  due  to  the  timing  of the acquisition.  On a normalized basis, total
services  revenue  for  the  six  months and quarter ended June 30, 1999 grew by
approximately  6.4%  and  5.8%  year-over-year.  Both  customer  services  and
professional  services  grew  for  the  quarter  ended  June  30,  1999.

     Services revenue for North America for the six months and second quarter of
1999  grew  $1.0  billion  and $480 million over the comparable periods of 1998.
Services  revenue in North America represented 34.9% and 35.3% of total services
revenue  in  the  six  months  and second quarter of 1999 and 34.4% and 33.1% of
total  services revenue in the comparable periods of 1998.  Services revenue for
EMEA  for  the  six months and second quarter of 1999 grew $1.4 billion and $625
million  over  the  comparable  periods  of  1998.  Services  revenue  in  EMEA
represented  46.3%  and  45.7%  of  total services revenue in the six months and
second  quarter  of  1999  and  39.7% and 42.3% of total services revenue in the
comparable  periods  of  1998.

GROSS  MARGIN

     Gross  margin  as  a  percentage  of revenue was 22.6% and 20.5% in the six
months  and  second  quarter  of 1999, up from 18.5% and 19.0% in the comparable
periods  of 1998.  Products gross margin as a percentage of products revenue was
20.9%  and  18.6%  for  the  six months and second quarter of 1999 and 17.7% and
18.0%  for  comparable  periods  of 1998.  The increase in gross margin for 1999
compared  to  1998 was due primarily to the 1998 price reductions and additional
promotional  activities on commercial products taken in North America to respond
to  competitive pricing conditions.  Gross margins in the second quarter of 1999
were  below  the  first  quarter 1999 performance of 24.7%, due to the increased
price  competition,  an  unfavorable currency impact, a write-off of capitalized
software  costs  related  to  certain  discontinued products, increased warranty
obligation  for several commercial PC products no longer shipping, and penalties
related  to  some  long-term  purchasing  commitments.

                                       13
<PAGE>
     Products  gross margin as a percentage of products revenue in North America
was  22.8% and 20.9% for the six months and second quarter of 1999 and 14.1% and
21.3% for the comparable periods of 1998.  Products gross margin as a percentage
of  products  revenue  in EMEA was 22.9% and 20.7% for the six months and second
quarter  of  1999  and  24.6%  and  25.0%  for  the  comparable periods of 1998.

     Services  gross  margin  as  a percentage of services revenue was 30.9% and
29.7%  for the six months and second quarter of 1999 and 33.7% and 31.3% for the
comparable  periods  of 1998.  Services gross margin as a percentage of services
revenue in North America was 41.4% for the six months and second quarter of 1999
and  41.3%  and 37.1% for the comparable periods of 1998.  Services gross margin
as  a  percentage  of  services  revenue in EMEA was 30.9% and 30.8% for the six
months and second quarter of 1999 and 36.3% and 31.1% for the comparable periods
of  1998.  Services  gross margin in 1999 is reflective of the expanded business
model  as  a  result  of  the  acquisition  of  Digital.

OPERATING  EXPENSES

     Compaq's selling, general and administrative expense increased $1.4 billion
or 74.8% and $681 million or 64.8% for the six months and second quarter of 1999
as  compared  to  1998.  As  a  percentage  of  revenue,  selling,  general  and
administrative  expense was 17.0% and 18.4% in the six months and second quarter
of  1999 and 15.9% and 18.0% in the comparable periods of 1998.  The increase as
a  percentage  of revenue in both the six months and second quarter of 1999 over
1998  was  primarily  due  to  the  acquisition  of  Digital, which historically
maintained higher selling, general and administrative expense as a percentage of
revenue,  and lower than expected total revenue.  In the second quarter of 1999,
operating  expenses  increased  over  the first quarter of 1999 due to increased
spending  on  promotional advertising events, increased investment in e-commerce
and  other  sales  related  initiatives,  an  increase  in goodwill amortization
resulting  from  the  Zip2  and  Shopping.com  acquisitions,  the write-off of a
monitor  technology  venture  no  longer  critical  to  Compaq's  core strategy,
incremental accounts receivable allowances, and an acceleration of the year 2000
readiness  program.

     Research  and  development  costs  increased $376 million or 76.1% and $217
million  or  87.1%  in  the six months and second quarter of 1999 as compared to
1998,  primarily  due  to  the  acquisition  of  Digital.

PURCHASED  IN-PROCESS  TECHNOLOGY

     Upon  consummation of the Digital acquisition in June 1998, Compaq expensed
approximately $3.2 billion representing purchased in-process technology that had
not  yet  reached  technological  feasibility and had no alternative future use.
The  value  was determined  by an independent appraisal that included estimating
the  costs  to  develop the purchased in-process  technology  into  commercially
viable  products,  estimating  the resulting  net cash flows from such projects,
and discounting the net cash flows back to  their  present values.  The discount
rate includes a factor that takes into account the uncertainty  surrounding  the
successful development of the purchased  in-process  technology.

     If  these  projects  are  not  successfully developed, Compaq's revenue and
profitability  may  be  adversely affected in future periods.  Additionally, the
value  of other intangible assets acquired may become impaired.  Compaq began to
benefit  from  the  purchased  in-process  technology  in  late  1998  and  is
continuously  monitoring  its  development  projects.  The  development  efforts
related  to  the  majority  of  the purchased in-process technology projects are
progressing  in  accordance  with  the assumptions underlying the appraisal.  As
expected  in  the  normal  course  of product development, certain projects have
experienced  delays  and  other  projects  are being evaluated due to changes in
strategic  direction  and  market  conditions,  however,  these  factors are not
expected  to  have  a  material  adverse  affect  on  results  of operations and
financial  condition  of  future  periods.

                                       14
<PAGE>
RESTRUCTURING  ACTIONS

     In  June  1999,  Compaq  announced  it  expects  to  take  a  substantial
restructuring  charge  in the third quarter.  This charge is associated with the
realignment  of  the organization to better meet customer needs and achieve cost
structures appropriate to the target markets.  The plans are being developed and
are  expected  to  be  completed  in  the third quarter.  The expected charge is
estimated  to  range  from  $700 million to  $900 million,  which will include a
headcount reduction  of  approximately  6,000  to  8,000  employees  and  some
related  facility  closings.

     In June 1998,  management  approved  restructuring  plans to integrate  the
operations  of Compaq and Digital.  The accrued  restructuring  costs related to
these  plans  include  the cost of  involuntary  employee  separation  benefits,
consolidation  of  duplicative  facilities,  the  cost  of  terminating  Digital
contractual  obligations  and relocation  costs of Digital  employees.  Employee
separation benefits include severance, medical and other benefits. Restructuring
costs  related to Digital were  recorded as a component  of the  purchase  price
allocation and costs related to Compaq were charged to operations.

     The  cost  of   employee   separations   associated   with  the  June  1998
restructuring  plan included  separation  benefits  estimated for  approximately
12,400  Digital  employees  and 5,000  Compaq  employees.  Employee  separations
included the majority of business functions,  job classes and geographies,  with
most of the reductions  occurring in North America and Europe. The restructuring
plans also included  costs  associated  with the closure of 13.2 million  square
feet of office,  distribution  and  manufacturing  space,  principally  in North
America  and Europe.  Compaq has  completed  most of the actions  related to the
restructuring  plans.  Compaq  believes the  remaining  reserve is sufficient to
complete the remaining actions under the plan.

     The  accrued  restructuring costs and amounts charged against the provision
as  of  June  30,  1999,  are  as  follows:

<TABLE>
<CAPTION>
                                       DECEMBER 31,         CASH        JUNE 30,
                                          1998          EXPENDITURES     1999
                                   ------------------  --------------  ---------
                                                       (IN MILLIONS)

<S>                                <C>                 <C>             <C>
Employee separations               $              723  $        (336)  $     387
Facility closure costs                            317            (45)        272
Relocation                                         43             (6)         37
Other exit costs                                   27            (10)         17
                                   ------------------  --------------  ---------
Total accrued restructuring costs  $            1,110  $        (397)  $     713
                                   ==================  ==============  =========
</TABLE>

The  total  accrued restructuring cost of $713 million at June 30, 1999 includes
amounts  for  actions  that  have  already  been  taken,  but  for  which  cash
expenditures  have not yet been made.  Approximately $200 million of the accrual
at June 30, 1999 relates to future cash payments to employees separated prior to
June  30,  1999.

     For  the  six  months  ended  June  30,  1999,  employee separations due to
restructuring  actions  totaled  3,850.  The net headcount reduction for the six
months  ended  June  30,  1999, including attrition and restructuring, offset by
hiring, totaled approximately 1,800.  Since the date of the Digital acquisition,
employee  separations  due  to  restructuring  actions  were  14,400.  The  net
headcount  reduction  since  the  date  of  the  Digital  acquisition, including
attrition  and  restructuring,  offset  by  hiring,  was  approximately  14,500.

OTHER  ITEMS

     Compaq  had  other  expense,  net, of $42 million and $8 million in the six
months  and second quarter of 1999 and other income, net, of $74 million and $44
million  in the comparable periods of 1998.  Other expense, net, in 1999 relates
to  lower  interest  income  and  currency  losses recognized during the period.
Other  expense  is  net  of  gains  recognized  on  the  sale of certain network
switching  assets.

                                       15
<PAGE>
     In  June 1998, the Financial Accounting Standards Board issued Statement of
Financial  Accounting  Standards  No. 133, Accounting for Derivative Instruments
and  Hedging  Activities (FAS 133).  As amended by FAS 137, FAS 133 is effective
January 1, 2001 for Compaq.  FAS 133 requires that all derivative instruments be
recorded  on  the  balance  sheet  at  fair value.  Changes in the fair value of
derivatives  are recorded each period in current earnings or other comprehensive
income,  depending  on  whether  a  derivative  is designated as part of a hedge
transaction  and  the type of hedge transaction.  The ineffective portion of all
hedges  will be recognized in current-period earnings.  Compaq is in the process
of  determining the impact that the adoption of FAS 133 will have on its results
or  financial  position.

LIQUIDITY  AND  CAPITAL  RESOURCES

     Compaq's  cash  and  cash equivalents decreased to $2.9 billion at June 30,
1999,  from  $4.1  billion  at December 31, 1998.  The decrease in cash and cash
equivalents  in  the  six months of 1999 was primarily due to cash spent for the
closing  of  the Shopping.com acquisition of approximately  $219 million, net of
cash  acquired;  the  closing  of  the  Zip2  acquisition for approximately $295
million,  net  of  cash acquired; $400 million for the retirement of the Digital
preferred  stock;  $168  million  in  stock  repurchases;  $225  million for the
issuance of a note receivable; and cash used for the purchase of property, plant
and  equipment  of  $507  million.

     Operating  activities  provided  $312  million in cash in the six months of
1999,  compared  to  $533  million  provided  in  the  six months of  1998.  The
decrease  in cash generated by operating activities in 1999 compared to 1998 was
primarily  due  to  the  increase  in  net  deferred  tax assets, an increase in
inventories,  cash  payments  for  accounts  payable  and  cash  payments  for
restructuring  activities.

     Accounts  receivable were $6.6 billion at June 30, 1999 and $7.0 billion at
December 31, 1998.  Days sales  outstanding  for the second  quarter was 60 days
versus 56 days for the  fourth  quarter  of 1998.  The  increase  in days  sales
outstanding  from the fourth  quarter was largely  driven by late quarter sales,
with June representing a large percentage of the second quarter 1999 revenues.

     Inventory  levels  increased  to $2.2 billion at June 30, 1999, compared to
$2.0  billion at December 31, 1998, due to reduced revenue for the quarter ended
June 30, 1999.  Inventory turns for the second quarter of 1999 decreased to 13.4
versus  15.9  for  the  fourth  quarter  of  1998.

     Future  uses  of  cash  during  the  remainder  of  1999  includes  capital
expenditures for  land,  buildings and equipment, which are estimated to be $500
million,  and  cash  expenditures  for  the planned restructuring  activities as
discussed above.

     Compaq  also  plans  to  use  available  liquidity to develop the purchased
in-process  technology  related  to  the  Digital  acquisition into commercially
viable  products.  This  primarily consists of planning, designing, prototyping,
high-volume manufacturing verification and testing activities that are necessary
to  establish  that a product can be produced to meet its design specifications,
including  functions, features and technical performance requirements.  Bringing
the purchased in-process technology to market also includes developing firmware,
diagnostic software, device drives, and testing the technology for compatibility
and  interoperability  with commercially viable products.  At June 30, 1999, the
estimated  costs  to  be incurred to develop the purchased in-process technology
into  commercially viable products totaled $3.0 billion in the aggregate through
the year 2005 ($180 million in 1999, $570 million in 2000, $610 million in 2001,
$590  million  in  2002,  $540  million  in  2003, $320 million in 2004 and $140
million  in  2005).

     Compaq  currently  expects 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.  Compaq  has  a
$1 billion revolving  credit  facility  that  expires  in  October  1999  and  a
$3 billion  revolving  credit  facility  that  expires  in  2002.  Both of these
facilities  were  unused  at  June 30, 1999.  Management expects to renew the $1
billion  revolving credit  facility  in  the  third  quarter.  Compaq  has  also
established a $750 million commercial paper program, supported by the $3 billion
credit  facility, which  was  unused  at  June  30,  1999.  Additionally, Compaq
maintains various uncommitted lines of  credit, which totaled approximately $600
million  at  June 30,  1999.  There were no outstanding borrowings against these
lines  at  June 30, 1999.  Compaq  believes that these sources of credit provide
sufficient  financial flexibility  to  meet future funding requirements.  Compaq
continually evaluates the need to establish other sources of working capital and
will pursue those it considers  appropriate  based upon  its  needs  and  market
conditions.

                                       16
<PAGE>
FACTORS  THAT  MAY  AFFECT  FUTURE  RESULTS

     Compaq  participates in a highly volatile industry that is characterized by
intense  industry-wide  competition.  Industry  participants confront aggressive
pricing  practices,  continually  changing  customer  demand patterns, and rapid
technological  developments.  The  cautionary statements 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  places  pressure  on  revenue  and gross margins.
Competition  remains intense in the information technology industry with a large
number  of competitors vying for market share. Competition creates an aggressive
pricing  environment,  which  continues  to  put  pressure  on revenue and gross
margins.  Some  competitors  will  accept lower margins on personal computers to
gain  high-end  sales,  services  business,  and  financing  revenues.  Compaq
experienced  competitive pressures in the first half of 1999, which affected its
sales  and led to sequential reductions in its gross margins.  This pressure may
continue  in  the  future.

     Transition to direct sales could negatively  affect financial  results.  In
recent  years,  the direct sales market for personal  computers has grown faster
than the indirect  market.  Compaq sells directly to end users in its enterprise
and services businesses and primarily sells through third party resellers in its
personal computer business. Direct sales present a more efficient business model
particularly  when customer contact can be utilized to encourage sales of higher
margin  products  that are in stock.  Compaq  does not  currently  have in place
processes  for order  entry,  production  of  individualized  units,  and direct
distribution  that can  operate  efficiently  to manage a large  portion  of its
current  personal  computer sales.  Compaq has established a variety of programs
designed to achieve these  capabilities.  The failure to successfully  implement
these  programs in a timely manner could have a material  adverse  impact on its
business.  In addition,  a transition from indirect sales to greater reliance on
direct sales could create a  short-term  decline in revenues if resellers  favor
other  brands  before  Compaq  achieves  full  capacity to compete in the direct
sector.

     Delays in new systems  implementation could hamper operational  efficiency.
Compaq continues to focus on increasing the  effectiveness and efficiency of its
business and information management processes to increase customer satisfaction,
improve  productivity and lower costs. In connection with these efforts,  Compaq
is moving many of its systems from a legacy  environment of proprietary  systems
to  client-server  architectures,  as well as  integrating  systems  from  newly
acquired  businesses.  Integrating the systems at Digital and Tandem complicates
this process,  as does the need to ensure Year 2000  compliance for its systems.
(See "Year 2000  compliance  requires  significant  effort" below.) This year is
critical to this effort  because  delays in the  transition to new systems could
hamper Compaq's efforts to increase its operational  efficiency.  Further delays
in implementing  improvements could adversely affect inventory levels,  cash and
related profitability.

     Restructuring  activities  could  impede  operations.  Compaq  anticipates
significant  restructuring  activities  in  the  second  half  of 1999 that will
continue  to  be  carried  out  in the first half of 2000.  These activities are
focused  on  alignment  around  three  business  groups,  each  of which will be
structured to be competitive within its sphere of operations.  Compaq is focused
on  bringing  its  operational  expenses  to  appropriate levels for each of its
businesses  while  simultaneously  implementing  extensive  new  programs.  The
significant  risks  associated  with  these  actions  include  delays  in
decision-making,  lack  of clear lines of authority during transitions, customer
confusion  about Compaq's future products and services, and an adverse impact on
employee  morale  and  retention.

                                       17
<PAGE>
     Integrating businesses diverts focus.  Compaq believes that the acquisition
of  Digital  and  other companies will enhance its operating results, but Compaq
confronts  challenges  in  synchronizing  diverse  product roadmaps and business
processes  and  integrating  logistics, marketing, product development, services
and manufacturing operations to achieve efficiencies.  Timing of these decisions
is  a critical element in Compaq's success.  Taking the necessary steps may lead
to  gaps in short-term performance; delaying action will reduce Compaq's ability
to  compete  effectively  because  resources and people will be too dispersed to
achieve  acceptable  rates  of return.  Compaq's high-end business in particular
has  been  affected  by  integration  issues  involving  customer  perception,
overlapping  product  lines  and  the  need to implement appropriate sales force
training and incentive plans.  Compaq has also made estimates in connection with
the  value  of  purchased  in-process  technology.  If  these  projects  are not
successfully  developed,  Compaq's  future  revenue  and  profitability  may  be
adversely  affected  and  the  value of other intangibles could be reduced. This
risk  is  more  fully  discussed  under  "Purchased  In-Process  Technology."

     Market growth estimates depend upon evaluation of Year 2000 impact.  Compaq
expects the personal  computer market to expand in 1999 in line with third-party
research organizations'  forecasts of revenue growth of 5%. Based on third-party
research  enterprise market revenue is expected to expand at a growth rate of 8%
and the high technology service sector revenue is expected to expand at the rate
of 13%. The actual  growth of each of these  markets in 1999 will depend in part
on customers'  response to the Year 2000 transition.  Some commentators  believe
that  concerns  about Year 2000 will expand demand in the last half of the year,
particularly  in the small and medium  business  arena where  customers may have
delayed implementation of necessary changes.  Others believe that concerns about
implementing  new systems in the face of Year 2000  concerns  will slow  demand,
particularly  in  fourth  quarter  sales of high end  products  to major  global
customers.

     Quarterly   sales  cycle  makes  planning  and   operational   efficiencies
difficult. Compaq, like other computer companies,  generally sells more products
in the third month of each  quarter  than in the first and second  months.  This
sales pattern places pressure on  manufacturing  and logistics  systems based on
internal  forecasts and may  adversely  affect  Compaq's  ability to predict its
financial  results  accurately.   In  addition,  to  rationalize   manufacturing
utilization,  Compaq may build products early in the quarter in  anticipation of
demand  late  in  the  quarter.   Developments  late  in  a  quarter,   such  as
lower-than-anticipated  product demand, a systems failure,  or component pricing
movements,   can  adversely   impact   inventory   levels,   cash,  and  related
profitability,  which is  disproportionate  to the number of days in the quarter
that is affected.

     Government focus on supplier activities could reduce competitive advantage.
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 and
services in a manner valued by customers.  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 believes that it has
been  successful  in  obtaining  competitive  pricing in these  efforts  and has
entered  into  license  agreements  with key  industry  participants,  including
Microsoft and Texas Instruments.  Recently the U.S. government has increased its
efforts to ensure that the holders of intellectual property do not utilize their
rights in a manner that violates  antitrust laws. There can be no assurance that
action by the federal  government will not impede Compaq's  ability to negotiate
terms that give it a  competitive  market  advantage in component  purchases and
under the license  agreements  that are necessary to operate its business in the
future.

     New  distribution  model  and  credit risks.  Compaq's  primary  means  of
distribution is through distributors and resellers.  Compaq continually monitors
and  manages the credit it extends to distributors and resellers and attempts to
limit  credit  risks by  utilizing  risk  transfer  arrangements  and  obtaining
security interests.  Recently distributors and resellers have been consolidating
in  response  to changes  in the  profitability  of their  businesses.  Compaq's
business could be  adversely affected in the  event that the financial condition
of  its  distributors  and  resellers  erodes.  Upon the  financial failure of a
distributor or reseller,  Compaq could experience disruptions in distribution as
well as a loss associated with the unsecured portion of any outstanding accounts
receivable.  In August 1999,  Compaq began to implement  its plan to  reduce the
number of its U.S. distributors.  This reduction further concentrates the credit
and business risks.

                                       18
<PAGE>
     Doing business in certain locations creates additional risks. Manufacturing
operations in developing countries,  such as Brazil and China, and the expansion
of sales into  economically  volatile areas such as Asia Pacific,  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.  Compaq is also subject to any political and financial  instability  in
the countries in which it operates,  including  inflation,  recession,  currency
devaluation  and interest  rate  fluctuations.  Compaq  continues to monitor its
business  operations in these regions and takes various measures to manage risks
in these areas.

     Year 2000 compliance requires  significant effort. The following disclosure
is a Year 2000 readiness  disclosure statement under the Year 2000 Readiness and
Disclosure Act.

     Compaq's  Year  2000  program  is  designed  to minimize the possibility of
serious Year 2000 interruptions. Possible Year 2000 worst case scenarios include
the  interruption  of  significant  parts  of  Compaq's  business as a result of
critical  information  systems failure or the failure of suppliers, distributors
or  customers.  Any  such  interruption  may  have  a material adverse impact on
future  results.  Since  their  possibility  cannot  be  eliminated,  Compaq  is
incorporating  Year  2000  concerns  into its contingency plans for dealing with
catastrophic  events.

     In  1997,  Compaq established a task force to address its personal computer
product and customer concerns, and a separate task force to address its internal
information systems, including technology infrastructure and embedded technology
systems,  and the compliance of its suppliers and distributors.  In 1998, Compaq
integrated  the  Tandem  and  Digital  task forces with its own so that the task
force addresses the product and information systems and supplier and distributor
concerns  for  the  entire  company.

     With respect to product  readiness,  the compliance  definitions of Compaq,
Tandem  and  Digital  remain  in  effect  for most of the  respective  follow-on
products of each  company.  The readiness  status of Compaq,  Tandem and Digital
products    is    available    on   the   Compaq   Year   2000   Web   site   at
www.compaq.com/year2000.  In addition to selling  tested  products,  Compaq also
-----------------------
offers a range of Year 2000  readiness  services.  Because  there is no  uniform
definition of Year 2000 "compliance" and because all customer  situations cannot
be anticipated, particularly those involving other vendors' products, Compaq may
see a change in demand or an increase in warranty  and other  claims as a result
of the Year 2000  transition.  Such  events,  should  they  occur,  could have a
material adverse impact on future results.

     In  1998,   substantially  all  internal   information  systems  and  other
infrastructure areas including communication systems,  building security systems
and  embedded  technologies  in  areas  such  as  manufacturing  processes  were
identified,  assessed,  and categorized for Year 2000 readiness as Priority 1, 2
and 3, with 1 being critical, 2 being intermediate and 3 being non-critical with
no  impact on  business  operations.  Compaq is on  schedule  for  meeting  full
compliance and was substantially complete with its remediation of Priority 1 and
Priority 2 items  (with  some  approved  exceptions)  by June 30,  1999.  Compaq
expects to be Year 2000 ready worldwide by September 30, 1999.

     Compaq  has  conducted  a  review  of  its  internal  production equipment,
production  and  procurement  suppliers, and key channel partners regarding Year
2000 readiness.  Substantially all internal production equipment has been tested
and  upgraded  to  achieve  a  Year  2000  readiness  state.  Substantially  all
suppliers,  including  strategic  OEM's, have been reviewed and risk assessments
have now been completed. Management believes that each of its strategic OEMs has
achieved  a  Year  2000  readiness  state  or  is  implementing plans to achieve
readiness in a timely manner.  In certain cases, Compaq has identified component
suppliers  who  may  not  achieve  Year  2000  readiness.  While these suppliers
continue  to  address  their  Year  2000  issues, Compaq is currently developing
plans  for  contingent  supply  sources  for  these  components  and  will begin
implementing these plans as required.  Reviews of key channel partners have also
been completed.  With  respect  to suppliers and  distributors, because Compaq's
readiness depends upon their successful remediation of Y2K problems, failures on
the part of suppliers and  distributors  remain  a  possibility  and  could have
a material adverse  impact  on  future  results.


                                       19
<PAGE>
     Compaq  is  also carrying out major planned enterprise-wide internal system
renewal  efforts.  These planned major enterprise-wide system renewals have been
incorporated  into  the Year 2000 readiness effort.  Installations are scheduled
through  the  end  of  1999.  Based  on  Compaq's ongoing evaluation of internal
information  and  other  systems,  and system renewal roll-out schedules, Compaq
does not anticipate significant business interruption.  However, should business
interruption  occur, there could be a material adverse impact on future results.

     The costs of the  readiness  program for  products are  primarily  costs of
existing  internal  resources  largely  absorbed  within  existing   engineering
spending levels.  These costs were incurred  primarily in 1997 and earlier years
and were not broken out from other product engineering costs. No future material
product readiness costs are anticipated.  The costs of the readiness program for
internal  information  and other systems and suppliers  and  distributors  are a
combination  of  incremental  external  spending  and use of  existing  internal
resources and expertise.  Over the life of the internal readiness effort,  these
costs are  estimated to be $125  million,  of which  approximately  75% has been
incurred  through June 1999.  The  remaining  costs are  primarily  reserved for
incident management,  business continuity plans and program shutdown.  The costs
of implementing  enterprise-wide system renewal efforts are not included in this
estimate.  Milestones  and  implementation  dates and the costs of Compaq's Year
2000 readiness program are subject to change based on new circumstances that may
arise  or  new  information   becoming  available  that  may  change  underlying
assumptions or requirements.

     Effective tax rate.  Compaq  currently has a 32% effective tax rate for the
six months ended June 30, 1999.  Compaq benefits from a tax holiday in Singapore
that expires in August 2004 if cumulative investment levels and other conditions
are  maintained.  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 United States. If the
earnings of this  subsidiary as a percentage of Compaq's  total earnings were to
decline  significantly  from  current  levels,  or should  Compaq's  ability  to
reinvest those earnings be reduced,  Compaq's effective tax rate would increase.
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 tax rate could increase.

     Currency Fluctuations. Compaq's risks associated with currency fluctuations
are discussed in Item 3 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.

ITEM  3.  MARKET  RISKS

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

     Compaq  uses  market  valuations  and  value-at-risk  valuation  methods to
preliminarily  assess  market  risk  of its financial instruments and derivative
portfolios.  It  uses  software by RiskMetrics  to estimate the value-at-risk of
its  financial  instruments  and  derivative  portfolios  based  on estimates of
volatility  and  correlation of market factors drawn from RiskMetrics  data sets
for the dates calculated.  RiskMetrics  defines loss as a reduction in the value
of  a portfolio in the event of adverse market conditions, using a predetermined
confidence interval, over a specified period of time.  Compaq included all fixed
income  investments  and  foreign  exchange  contracts  in  the  value-at-risk
calculation.  The  holding  period for these instruments varies from two days to
nine  months.  The  measured  value-at-risk  from  holding  derivative and other
financial  instruments,  using a 95% confidence level and assuming normal market
conditions  during  the  period  ended  June  30,  1999  was  immaterial.

                                       20
<PAGE>
The  value  of  the  U.S. dollar affects Compaq's financial results.  Changes in
exchange  rates  may  positively  or  negatively  affect  Compaq's  revenues  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 some
markets,  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 if a significant and sudden
decline  occurs  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 revenues of Compaq's international marketing subsidiaries, with
the  exception  of Latin America and other subsidiaries that reside in countries
in which such activity would not be cost effective or local regulations preclude
this type of activity.  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  and services or a weakening exchange rate against currencies in
which  Compaq  incurs  costs, Compaq's revenues or costs are adversely affected.

                                       21
<PAGE>
                           PART II.  OTHER INFORMATION

ITEM  1.  LEGAL  PROCEEDINGS

     See  Note  11  to  Consolidated  Financial  Data,  which is incorporated by
reference.

ITEM  4.  SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS
---------------------------------------------------------------------

     At  the  annual  meeting  of  stockholders of Compaq on April 22, 1999, the
stockholders  voted on two proposals. The first was a proposal to elect Benjamin
M.  Rosen, Lawrence T. Babbio, Jr., Judith L. Craven, Frank P. Doyle, Robert Ted
Enloe,  III,  George  H.  Heilmeier,  Peter N. Larson, Kenneth L. Lay, Thomas J.
Perkins,  Kenneth  Roman  and  Lucille  S.  Salhany  as directors of Compaq. The
following  table  sets  forth  the  votes  in  such  election:


       Director            Votes For    Votes Against or Withheld
-----------------------  -------------  -------------------------

Benjamin M. Rosen        1,432,191,244                 12,103,130

Lawrence T. Babbio, Jr.  1,432,653,750                 11,640,624

Judith L. Craven         1,431,148,436                 13,145,938

Frank P. Doyle           1,432,108,981                 12,185,393

Robert Ted Enloe, III    1,432,284,036                 12,010,338

George H. Heilmeier      1,432,534,382                 11,759,992

Peter N. Larson          1,432,529,838                 11,764,536

Kenneth L. Lay           1,432,431,330                 11,863,044

Thomas J. Perkins        1,432,301,567                 11,992,807

Kenneth Roman            1,432,182,559                 12,111,815

Lucille S. Salhany       1,432,411,416                 11,882,958


     The  shareholders  also  voted on a proposal to approve the Compaq Employee
Stock Purchase Plan.  The following table sets forth the votes in such election:


                    Number of Shares:     1,444,294,374

                        Voted For         1,372,605,527

                        Withheld             66,209,770

                        Abstentions           5,477,677

                        Broker Non-Votes          1,400


ITEM  5.  OTHER  INFORMATION

Deadline  for  Receipt  of  Shareholder  Proposals

     Proposals  of  shareholders  that  are intended to be presented at Compaq's
2000  Annual  Meeting  of  Shareholders must be received by Compaq no later than
November  8,  1999,  to be included in the Proxy Statement and proxy relating to
that  meeting.  Shareholder  proposals  should  be  directed  to Compaq Investor
Relations,  P.O.  Box  692000,  Houston,  Texas,  Telephone Number 800-433-2391.

                                       22
<PAGE>
     For  any  proposal that is not submitted for inclusion in next year's Proxy
Statement,  but  is  instead  sought to be presented directly at the 2000 Annual
Meeting,  management  will  be  able  to  vote  proxies in its discretion if the
Company  (1)  receives  notice  of  the proposal before the close of business on
January 22, 2000, and advises share owners in the 2000 Proxy Statement about the
nature  of  the matter and how management intends to vote on such matter; or (2)
does  not  receive  notice  of  the  proposal  prior  to  the  close of business
January 22, 2000.

ITEM  6.  EXHIBITS  AND  REPORTS  ON  FORM  8-K

<TABLE>
<CAPTION>

(a)  Exhibit No.  Description
<C>  <C>          <S>

           10.22  Purchase and Subscription Agreement dated June 29, 1999, by and among
                  CMGI, Inc., and Zoom Newco, Inc., and Compaq Computer Corporation, Digital
                  Equipment Corporation, and AltaVista Company with Exhibits +

           10.23  Employment Agreement effective as of July 22, 1999, between Compaq
                  Computer Corporation and Michael D. Capellas

           10.24  Separation Agreement Between Eckhard Pfeiffer and Compaq Computer
                  Corporation

              27  EDGAR financial data schedule
<FN>
          + Confidential  treatment has been  requested for certain  portions of
          this  Exhibit.  These  portions  have been redacted and marked with an
          [*].  The  non-redacted  version of this  Exhibit has been sent to the
          Securities   and  Exchange   Commission   with  an   application   for
          confidential treatment.
</TABLE>


<TABLE>
<CAPTION>
(b)  Reports
     on Form
     8-K
<C>  <C>       <S>
          (i)  Report on Form 8-K dated April 5, 1999,  containing Compaq's news
               release  dated April 5, 1999,  announcing  the  completion of the
               acquisition of Zip2 Corporation

          (ii) Report on Form 8-K dated April 9, 1999,  containing Compaq's news
               release  dated April 9, 1999,  announcing  that based upon a $9.4
               billion  revenue  estimate and a less than  favorable  sales mix,
               Compaq  expected  to  report a profit of  approximately  $.15 per
               share for the quarter ended March 31, 1999

          (iii)Report on Form 8-K  dated  April 18,  1999,  containing  Compaq's
               news release dated April 18, 1999, announcing the resignations of
               Chief  Executive  Officer,  Eckhard  Pfeiffer and Chief Financial
               Officer,  Earl Mason and the  formation of an Office of the Chief
               Executive   to  oversee  the   day-to-day   running  of  Compaq's
               operations

          (iv) Report on Form 8-K dated April 21, 1999, containing Compaq's news
               release  dated  April 21,  1999,  with  respect  to its  earnings
               release for first quarter 1999

          (v)  Report on Form 8-K dated May 11, 1999,  containing  Compaq's news
               release  dated May 11, 1999,  announcing  the  resignation  of an
               executive officer

          (vi) Report on Form 8-K dated June 17, 1999,  containing Compaq's news
               release dated June 17, 1999,  announcing that  expectations for a
               loss for the second  quarter  and an  anticipated  third  quarter
               restructuring charge

          (vii)Report on Form 8-K dated June 29, 1999,  containing Compaq's news
               release dated June 29, 1999,  announcing  that CMGI would acquire
               Compaq's AltaVista business and its related properties

          (viii) Report on Form 8-K dated  July 22,  1999,  containing  Compaq's
               news release dated July 22, 1999,  announcing the  appointment of
               Michael D. Capellas as president and chief executive officer

          (ix) Report on Form 8-K dated July 28, 1999,  containing Compaq's news
               release dated July 28, 1999,  announcing its earnings results for
               the second quarter of 1999
</TABLE>

All  other  items  specified  by  Part  II  of  this report are inapplicable and
accordingly  have  been  omitted.

                                       23
<PAGE>
                                   SIGNATURES

     Pursuant  to  the  requirements 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.

August  13,  1999                  COMPAQ  COMPUTER  CORPORATION



                                   /s/  Ben  K.  Wells
                                   -------------------
                                   Ben  K. Wells, Acting Chief Financial Officer
                                   and  Vice  President,  Corporate  Treasurer
                                   (as  authorized  officer  and  as  acting
                                   principal  financial  officer)


                                       24
<PAGE>