Eric, according to Mylex, the SG&A was higher this quarter due to a $400K legal settlement and about $200K in other legal costs. Of course, the $400K is a non-recurring charge but, according to a questions that was asked, Coleen indicated that future legal costs will "continue to be material." But not as high as they were this quarter (though there is still a long running legal issue with a Dr. ?)
Other points from the conference call:
There were a total of 47 positions eliminated. The 27 they originally announced and another 20 from the NP&L area.
Mylex has taken back 3 accounts from AMI (but they would not disclose who they were - HP definitely was not one). As it relates to HP, since HP did set the TPCC record with the 8 way Mylex product, HP has to offer the product within six months. Mylex has never stopped their dialogue with HP and Al describe this dialogue as being as "vigorous as always."
Mylex currently has product in the labs of AMI customers.
The gross margins are much better on the new products (good for both Mylex and the customers as Mylex can provide them better pricing and higher margins for themselves).
Expected savings from the work force reduction and restructuring will be about $2.3M per quarter.
Pacific Region sales did increase to 18% which is up from previous quarter (this is good).
Mylex expects 5% revenue growth over Q2 each in Q3 and Q4. This is taking into consideration the slowness in Asia and a typically weak Q3 in Europe.
Mylex purchased another 500K shares during Q2 bringing their total to 1.3M.
Purchase Orders for Digital are now coming from Compaq and they have seen no slow down. Digital has been using Mylex DAC960PU Ultra SCSI for the last few years and the DAC PJ is in qualification which they to ship in Q3.
Al was asked to speculate about when (if ever) Mylex would begin to see a slow down given the Compaq/Digital merger. Al said it was strictly speculation on his part as they have no information but if there were any slow down/loss it would probably be several quarters away.
Probably the highlight of the conference call for me was that according to Al, they expect, given the cost savings they've instituted that MYLEX WILL BE OUT OF THE RED Q3. Though he wasn't asked a follow up, I'm guessing this will be before the one time charges related to the restructuring though I could be wrong.
Mylex feels they are well positioned to move forward as they have a group of brand new products which are just emerging. They can provide a full range of solutions to OEMS on all levels of serves from low price to high performance. Neither AMI or Adaptec can do this.
Hopefully, I've accurately stated the points.
Thanks. |
