MXTR, GTW..Maxtor's 4th-Period Earnings Jumped Sharply, Exceeded Estimates estimates were for $0.12 cents MXTR earned $0.31 cents. Gateway's 4th-Quarter Net Soared 39%, Topping Estimates
NEW YORK -(Dow Jones)- Disk-drive maker Maxtor Corp. Thursday blew past analysts'estimates for fourth-quarter earnings.
The Milpitas, Calif., company said net income came to $30 million, or 31 cents a share on a fully diluted basis, compared with $23 million, or 52 cents a diluted share, in the year-earlier period. The mean estimate of analysts six surveyed by First Call was for net income of 12 cents per share.
The comparisons were distorted, however, by an increase in the average number of shares to 97.3 million in the latest quarter from 44 million a year earlier. In addition, the year-earlier results include a $20 million gain from the sale of a unit. Excluding
the gain, earnings in the prior quarter would have been $3 million.
Revenue in the latest quarter increased by 49% to $727.8 million from $489.4 million
a year earlier.
Maxtor shipped 5.3 million units in the fourth quarter, an increase of 23% from its third quarter. Maxtor (MXTR), which markets to original equipment manufacturers,
distributors and retailers, produces drives with storage capacities of 2.1 gigabytes to 13.6 gigabytes.
Disk-drive companies like Maxtor weathered a nasty first half of 1998, when Compaq Computer Corp. (CPQ) and other manufacturers cut back on PC production to reduce bloated
inventories. By the third quarter, however, most of the backed-up computer inventory had worked its way out of the system. In addition, Maxtor, which went public July 30, has taken market share at the expense of its larger rivals. One, Western Digital, is trying
to recover after falling behind in the technology race.
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Gateway's 4th-Quarter Net Soared 39%, Topping Estimates
NEW YORK -(Dow Jones)- Gateway Inc., the second-largest direct seller of personal
computers after Dell Computer Inc., late Thursday reported a 39% increase in net income
for the fourth quarter on a 17% jump in revenue, which should please analysts who were
worried about a possible shortfall.
Gateway (GTW), based in North Sioux City, S.D., said net income came to $129.1
million, or 81 cents a share, compared with $93 million, or 59 cents a share in the
year-earlier period. Revenue increased to $2.31 billion from $1.98 billion. The mean
estimate of analysts surveyed by First Call was for net income of 78 cents per share.
As the Christmas season began, analysts were concerned that Gateway wouldn't have
strong shipments. But consumers bought lots of PCs for the holiday. Analysts have said
that Gateway and its rival, Dell Computer Corp. maintained average selling prices of
about $2,000 by focusing on repeat buyers.
The company said operating income for the latest fourth quarter was $188 million,
compared with $140 million in 1997, and said other income rose to $14 million in the
latest quarter, more than double fourth-quarter 1997 figures. Gateway cited aggressive
supplier management, effective pricing management, a "richer" product mix and continued
declining component costs.
Gateway said gross profit margin was 21.6% in the fourth quarter, compared with 18% a
year ago.
The company said business in the Americas grew 34.5% in units and 15.9% in revenue
over 1997's fourth quarter, and said Europe reported a 20.9% increase in units and a 1.6%
increase in revenue compared to fourth quarter last year, because of the successful
launches of Your:)Ware and Gateway Country stores.
Gateway said Asia Pacific growth continued with an increase of 73.9% in units and an
increase of 50.6% in revenues compared to the fourth quarter of 1997.
Gateway said fiscal 1998 unit shipments rose 37% to 3.5 million units, compared to
2.6 million units shipped in 1997. The personal computer and software maker said it
exited the year with a 9.6% share of the total U.S. market.
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