NEWS:Data General Reports First Quarter 1998 Results
WESTBORO, Mass.--(BUSINESS WIRE)--Jan. 22, 1998--Data General Corporation today reported net income of $3.5 million, or $.07 per share on a diluted basis, on revenues of $365.3 million, for its first quarter of fiscal 1998, which ended December 27, 1997.
For the first quarter of fiscal 1997, the company reported net income of $10.4 million, or $.25 per share on a diluted basis, on revenues of $348.5 million.
"While year-over-year revenues increased and our outlook remains positive, our overall first quarter results were disappointing," said Data General President and Chief Executive Officer Ronald L. Skates. "The results were affected by the ongoing transition we are making in our storage business to fibre-channel technology and by weaker than expected product gross margins."
"Revenues from our CLARiiON storage business were comparable to last year's first quarter," said Mr. Skates. "As we and our customers make the transition from traditional storage technology to advanced fibre-channel technology, it is impacting short-term CLARiiON revenues. While the second fiscal quarter also will be challenging, the outlook for CLARiiON is positive. We have strong products in our traditional markets, and fibre channel positions us well in additional markets that require the ability to scale to several terabytes of storage, such as data warehousing, video, multi-media, scientific, imaging and enterprise-class storage solutions."
The company said that the decline in product gross margins compared with last year's first quarter reflects competitive pricing pressures and a shift in product mix.
Revenues for the company's AViiON server line were ten percent higher than last year's first quarter with revenues for Intel based systems growing nearly 70 percent. The increase was driven by continued strong sales of the company's NT based AViiON servers and by the growing demand for its new high-end NUMA technology based AV 20000 UNIX servers.
"We are pleased with the acceptance of our NUMA based AViiON servers. The new servers are opening up additional opportunities for us in high-performance on-line transaction processing and data warehousing applications," said Mr. Skates.
Since the company began volume shipments of the AV 20000 servers in the fourth fiscal quarter of 1997, more than 150 systems have been shipped worldwide. This includes the installation of the industry's first 32-processor Intel based NUMA system.
In a recently completed industry standard benchmark test, a 32-processor AV 20000 server running Oracle8 database software and using CLARiiON fibre-channel storage established an industry best price/performance and the highest Oracle performance to date for the TPC-D decision support benchmark.
"Revenues during the quarter for our AViiON systems that run the Windows NT Server operating system more than doubled from prior year levels," said Mr. Skates. "There was good growth in a number of key NT target markets including enterprise systems running software such as SAP's R/3 business suite, Microsoft Exchange and Citrix WinFrame multi-user NT software, as well as clustered systems with our NT Cluster-in-a-Box solution."
The AViiON NT line was further strengthened late in the quarter with the introduction of a new high-end enterprise server, the AV 8600. The new system supports up to eight 200MHz Pentium Pro processors and can also be used in clustered configurations running Microsoft Cluster Server.
Mr. Skates concluded, "The fundamentals of our business remain strong. While we remain cautious short-term, we believe that with our leading-edge AViiON server and CLARiiON storage lines, Data General is in a position to resume solid revenue growth and improved profitability in the second half of the fiscal year."
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Statements concerning the company's business outlook, anticipated profitability, revenues or expenses, and product line growth, together with other statements made in this press release which are not historical facts, are "forward-looking statements," as that term is defined under the Federal Securities Laws. Such statements are subject to risks and uncertainties which could cause actual results to differ materially from those projected. Such risks and uncertainties include, but are not limited to, fluctuations in customer demand, order patterns and inventory levels, changes and delays in product development plans and schedules, customer acceptance of new products, changes in pricing or other actions by competitors, general economic conditions, as well as other risks detailed in the company's filings with the Securities and Exchange Commission, including Data General's Report on Form 10-K for the 1997 fiscal year which ended September 27, 1997.
NOTE - Information on Data General, its products and services, can be accessed on the Internet at dg.com . Additional information on the CLARiiON Business Unit can be accessed at clariion.com
AViiON and CLARiiON are registered trademarks, and Cluster-in-a-Box is a trademark of Data General Corporation.
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DATA GENERAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions except per share amounts)
Quarter Ended
Dec. 27, Dec. 28, 1997 1996 Revenues: Product $ 267.2 $ 249.8
Service 98.1 98.7
Total revenues 365.3 348.5
Costs and expenses: Cost of product revenues 189.2 165.1
Cost of service revenues 60.2 64.4
Research and development 27.4 26.2
Selling, general, and administrative 84.4 80.6
Total costs and expenses 361.2 336.3
Income from operations 4.1 12.2
Interest income 3.5 2.0 Interest expense 3.6 3.2
Income before income taxes 4.0 11.0 Income tax provision .5 .6
Net income $ 3.5 $ 10.4
Basic income per share $ .07 $ .26
Weighted average shares
outstanding - Basic 48.6 39.7
Diluted income per share $ .07 $ .25
Weighted average shares
outstanding - Diluted 50.7 42.1
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DATA GENERAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
Dec. 27, Sep. 27, 1997 1997 Assets: Current assets: Cash and temporary cash investments $ 141.4 $ 216.8
Marketable securities 156.6 151.4
Receivables, net 303.8 296.4
Inventories 186.1 166.0
Other current assets 32.7 27.6
Total current assets 820.6 858.2
Property, plant, and equipment, net 188.1 180.4 Other assets 103.5 96.3
$1,112.2 $1,134.9
Liabilities and stockholders' equity: Current liabilities: Accounts payable $ 158.6 $ 154.6
Other current liabilities 207.1 237.2
Total current liabilities 365.7 391.8
Long-term debt 212.8 212.8 Other liabilities 9.1 11.5
Total stockholders' equity 524.6 518.8
$1,112.2 $1,134.9
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CONTACT:
Data General Corporation
Jim Dunlap, 508/898-6546
jim-dunlap@dg.com |
