<With all the competition and SEG wearing war paint now, the drive business is a scary place to be. Seems you have got to go with QNTM's DLT or get in with SEG once the war is in full frenzy and all the drive stocks are badly bloodied. Looks to me like years of progress down the drain.>
Sounds like trouble. Well, when you begin to feel very good about your holdings, that's always time to sell. I think the issue competition has never really changed, except on a cyclical basis, and the big let down is the fact that we were all hoping to see average PE's raise as the group stabalized. Well, I guess that's out and we'll be lucky to pull PE's much over 10.
A shame we see this coming quarter under so much of a cloud. I'm still waiting to see the bubble burst over PC makers.
Here's a note on earnings from the major market share supplier of suspensions. Much of their problem seems to come from developing a new business that is bleeding profits in a difficult time.
Hutchinson Technology Reports Fourth Quarter and Year End Results
PR Newswire, Tuesday, November 04, 1997 at 17:32
HUTCHINSON, Minn., Nov. 4 /PRNewswire/ -- Hutchinson Technology
Incorporated (NASDAQ:HTCH) today reported net income of $411,000, or $.02 per
share, on net sales of $100,354,000 for the 13-week fiscal fourth quarter
ended September 28, 1997. The company had previously announced that it
expected to operate at or near break-even for the fourth quarter. In the
14-week fiscal 1996 fourth quarter, Hutchinson Technology reported net income
of $1,409,000, or $.08 per share, on net sales of $91,890,000.
For the fiscal year ended September 28, 1997, the company reported a
204 percent increase in net income to $41,909,000 compared to $13,802,000 in
fiscal 1996. Fiscal 1997 net income per share increased 170 percent to $2.21
from $.82 in fiscal 1996 while fiscal 1997 net sales grew 28 percent to
$453,232,000 from $353,186,000 in fiscal 1996.
Fiscal 1996 earnings per share included a $.23 per share charge reflecting
recognition of certain fixed commitments to IBM under a technology sharing
agreement. In addition, earnings per share figures for the fiscal 1996 fourth
quarter and full year have been adjusted to reflect a three-for-one split of
the company's common stock effective February 11, 1997.
Fourth Quarter Results Match Expectations
Wayne M. Fortun, Hutchinson Technology's president and chief executive
officer, said the decline in fourth quarter net income compared to the
year-ago period resulted from decreasing demand for suspension assemblies in
the last two quarters. During the fiscal 1997 fourth quarter, the company
shipped 156 million suspension assemblies, compared to 195 million in the
fiscal 1997 third quarter. (In the 14-week fiscal 1996 fourth quarter, the
company shipped 143 million suspension assemblies.) "We believe this decline
in demand results from disk drive manufacturers temporarily slowing production
of certain models to reduce inventories," said Fortun. "As a result of
continued low demand and the drag on earnings related to development and
production ramp-up costs for our TSA suspensions, we expect to report a net
loss for our fiscal first quarter," said Fortun.
Fiscal 1997 Net Income Up 204 Percent
Commenting on fiscal 1997 results, Fortun said the year-over-year
increases in net sales and net income resulted from the company's ability to
meet increased customer demand at increased efficiency. For the full year,
the company's shipments of suspension assemblies increased 33 percent to
719 million from 539 million in fiscal 1996 while its gross profit margin
increased to 26 percent from 23 percent in the prior fiscal year.
"Having capacity sufficient to meet customer demand was key to delivering
the growth in net sales and net income we achieved in fiscal 1997," said
Fortun. "We will continue to focus on increasing output through improvements
in productivity and efficiency as well as planned additions to capacity."
Fortun said the start of photo etching operations at the company's Eau Claire,
Wis. plant is proceeding as planned and construction is on schedule for the
company's new Sioux Falls, S.D. plant and for additional manufacturing and
office space at its Hutchinson, Minn. plant. "While demand currently trails
year-ago levels, we continue to plan for increases in our suspension shipments
that are in line with historical increases," said Fortun. Over the past five
fiscal years, the company's shipments of suspension assemblies have grown at
an average annual rate of 32 percent.
The company's TSA suspensions (suspension assemblies incorporating
integrated electrical leads) are now in use on three disk drive programs and
are designed into nine other programs. "We are increasing our output of TSA
suspensions as quickly as possible to satisfy the rising demand from customers
who have found that TSA suspensions offer significant manufacturing and
performance advantages," said Fortun. He noted that in fiscal 1997 the
company produced approximately 8 million TSA suspensions and that during the
fiscal 1997 fourth quarter alone, the company produced 3.6 million TSA
suspensions or an average of 280,000 per week. During the first five weeks of
the first fiscal 1998 quarter, the company produced an average of 500,000 TSA
suspensions per week.
This announcement contains forward-looking statements regarding demand for
the company's products and manufacturing capacity. These statements involve
risks and uncertainties. The company's actual results could differ materially
from those anticipated in these forward-looking statements as a result of
fluctuating order rates and product mix, slower or faster customer acceptance
of its new products, difficulties in producing its TSA suspensions,
difficulties in expanding capacity, changes in manufacturing efficiencies and
the other factors described from time to time in the company's reports filed
with the Securities and Exchange Commission, including but not limited to its
Current Report on Form 8-K filed October 1, 1996; its Registration Statement
on Form S-3 filed February 5, 1997 and its Form 1O-Q for the fiscal quarter
ended June 29, 1997.
Hutchinson Technology is the leading worldwide supplier of suspension
assemblies for disk drives. Further information about Hutchinson Technology
is available on the World Wide Web at www.htch.com.
Income statements always get garbled when printed, so for full financials, go to this link. fast.quote.com
Regards,
Mark |
