Ouch
cbs.marketwatch.com
C-Cube earnings come up short
By Greg Winter, CBS
MarketWatch
Last Update: 8:55 PM ET Apr 24, 2000
NewsWatch
MILPITAS (CBS.MW) -- C-Cube
Microsystems Inc. announced first quarter
earnings Monday that fell far short of Wall
Street's expectations.
The maker of semiconductors
for DVD players and cable TV
boxes reported revenues of $61
million, up 4.8 percent from the
same period last year. But its
earnings fell to 3 cents per share,
down 28 cents from the year-ago
period.
Analysts polled by First Call had
been anticipating 36 cents per
share for the quarter.
C-Cube (CUBE: news, msgs)
attributed the drop-off in
earnings to the cost of selling its
systems management and
consulting division, known as
DiviCom, to rival Harmonic
Inc. The $1.7 billion stock swap
has received shareholder
approval and could be completed
within a few weeks, the
company announced today.
Beyond giving rise to a host of
consultancy fees, the merger agreement,
announced Oct. 27, 1999, required all C-Cube
employees to exercise their vested stock options
before completion of the deal. That hit the
company with roughly $3.4 million in what it
called "extraordinary taxes," whittling away at
its profit margin.
After letting go of its DiviCom division,
C-Cube's sole remaining business is
manufacturing semicondutors for companies
like Hitachi and Toshiba, an area that has
traditionally brought in 55 percent of the
company's revenue.
But recently, C-Cube's semiconductor revenue
has flattened and even declined, as video CDs
sales failed to take off. As a result, the company
switched to making semiconductors for the
fast-growing DVD, cable TV and recordable
CD market.
Shares of C-Cube shed 4 7/8, or 8.2 percent, to
54 5/8. The earnings report, released after the
bell, drove the stock down an additional 2 1/8
to 52 1/2 in after hours-trading.
Greg Winter is an online reporter for CBS
MarketWatch. |
