10/14/98 Dow Jones News Serv. 18:52:00
Dow Jones News Service
Copyright (c) 1998, Dow Jones & Company, Inc.
Wednesday, October 14, 1998
Xylan CEO Sees 4Q Sales Outpacing Networking Indus Avg
BUENA PARK, Calif. (Dow Jones)--Xylan Corp. (XYLN) expects fourth-quarter
revenue growth to continue to outpace computer networking industry averages,
its chief executive said.
"We expect strong continuing growth" in the direct and value-added-reseller
sales channels, Chairman, Chief Executive and President Steve Kim said in a
conference call following Xylan's third-quarter earnings report. He also said
he expects fourth-quarter operating expenses to be maintained at third-quarter
levels.
Given annual industry growth of about 24%, Xylan should post sequential
revenue gains exceeding 5%-6%, added Chief Financial Officer Dale J. Bartos.
Third-quarter revenue, reported after markets closed on Wednesday, was $91.1
million.
Bartos also guided 1999 revenue estimates into the $450-460 million range, in
the lower end of analysts' published figures.
Third-quarter net income of 22 cents a diluted share for the Calabasas,
Calif., company matched Wall Street's expectations.
Some market observers were expecting Xylan to report a disappointing third
quarter because the company warned in July that sales to its biggest customer,
International Business Machines Corp. (IBM), would be down sequentially.
A profit warning by Xylan's other major customer, Alcatel SA (ALA), also
dimmed the Street's profit hopes.
However, the company said, a 26% sequential increase in direct and value-
added-reseller, or VAR, sales lessened the company's dependence on those two
customers. Xylan plans to continue to broaden its customer base.
Analysts on the call expressed some surprise with such a strong jump in VAR
sales and wondered if Xylan's VAR channel had absorbed some products sold
during the quarter.
"We believe (the VAR channel) is fully balanced and well-positioned for the
fourth quarter," Bartos said.
Very few VAR partners stock inventories of Xylan's products, added Kim. "We
usually ship directly to the end user," he said.
-By Anthony Palazzo; 714-739-5538; tony.palazzo@cor.dowjones.com
(END) DOW JONES NEWS 10-14-98
06:52 PM
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