All my stocks are taking a hit today--Not just CPU. And by the way, CPU looks like an incredible bargain compared to the $27 shares of MWHS (Micro Warehouse). See below.
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Micro Warehouse, Inc. Reports Fourth Quarter and Full Year Results
PR Newswire - February 16, 1999 19:59
Fourth Quarter Highlights:
Sales of $595 Million -- EPS Growth of 81% -- Internet Sales Growth of
188%, 28% Sequentially -- Wintel Desktop Sales Growth 93%, Units Up 149%
NORWALK, Conn., Feb. 16 /PRNewswire/ -- Micro Warehouse, Inc. (Nasdaq: MWHS) today reported net sales of $595.0 million for the fourth quarter ended December 31, 1998, up $21.3 million or 3.7% over the same period last year. Net income in the 1998 fourth quarter increased 85.4% to $13.6 million or $0.38 per share compared to net income of $7.3 million or $0.21 per share for the fourth quarter of 1997, excluding an after-tax charge of $52.5 million or $1.52 per share in 1997 relating to the write-off of goodwill and restructuring costs.
Domestic sales were $426.8 million, an increase of 8.1% over the fourth quarter of 1997. Domestic Wintel sales grew approximately 19%. Domestic Macintosh-related sales declined approximately 6%. Wintel CPUs including desktops, servers and workstations, printers, PDAs and digital cameras were among the fastest growing product categories in the quarter. Wintel desktop computer sales increased 93% and unit volume increased 149% over the fourth quarter of 1997. Macintosh OS computer sales increased 2% and units increased 6% over the fourth quarter of 1997. Sales of Apple branded computers, including the new iMac, increased 45% in revenue and 86% in units, partially offsetting the decline in sales of other Macintosh-related products and the elimination of Macintosh clones from the marketplace.
International sales for the quarter declined 6.0% to $168.2 million. Wintel sales were flat and Macintosh-related sales declined approximately 20%. Excluding the results of the businesses disposed of in early 1998, international sales increased 3.9%, Wintel sales increased approximately 6% and Macintosh sales declined approximately 3%.
On a worldwide basis, Wintel sales grew approximately 11% during the quarter, more than offsetting a decline of approximately 9% in Macintosh-related sales. Overall, Macintosh sales represented approximately 34% of total worldwide sales, down from approximately 39% in the same period last year. The average order value remained stable at $523 compared to the fourth quarter of 1997.
President and Chief Executive Officer Peter Godfrey said, "We are pleased with our improved results for the 1998 fourth quarter and full year. During the year we executed on our restructuring plan, reduced our SG&A costs and significantly strengthened our balance sheet. In the fourth quarter, we put in place a new sales management team and began the process of expanding our telemarketing sales force. Currently, the domestic sales force numbers 711, up from 628 at October 15, 1998."
The gross profit margin for the quarter was 16.4% of net sales, compared to 16.3% in the third quarter of 1998 and 16.4% in the year-ago quarter. Higher margins in Europe resulting from the disposal of certain low-margin businesses in early 1998 offset lower margins in the U.S. The decline in domestic margins resulted from increased competitive pressures and greater low-margin internet sales, partially offset by higher rebates and other vendor programs. Additionally, inventory provisions were lower due to improved inventory management. The Company's gross profit margin may vary on a quarterly basis based upon vendor support programs, inventory price protection policies, product mix, pricing strategies, market conditions and other factors.
Selling, general and administrative expenses were $78.7 million, or 13.2% of net sales, compared to $80.9 million or 14.1% of net sales for the fourth quarter of 1997. The percentage decrease was principally due to lower net advertising costs which decreased to 0.7% of net sales compared to 1.2% in the same period last year, savings from the disposal and restructuring of certain international businesses and lower overall operating expenses. These decreases were partially offset by higher sales recruiting and training expenses and incentive compensation costs. Additionally, the Company incurred approximately $0.6 million after tax or $0.02 per share of Y2K costs in the current quarter.
Worldwide catalog circulation was flat at 32.6 million catalogs for the quarter, with domestic circulation up 3.9% and European circulation down 17.4% compared to 1997. The average annualized domestic sales per sales associate for the quarter and prior quarter were $2.7 million as compared to $1.6 million in the fourth quarter of 1997. This improvement was primarily the result of increased inbound sales force performance.
Internet-related sales from Warehouse.com and Webauction.com, the Company's internet commerce sites, were $64.6 million for the fourth quarter, up 188% from $22.4 million in the fourth quarter of 1997. On a sequential basis, sales were up 28% from $50.4 million in the third quarter of 1998. In December there were approximately 72,000 daily visitors to the Company's internet sites, up from approximately 62,000 in September. Warehouse.com sales were $59.0 million for the quarter, up from $41.6 million during the third quarter of 1998, representing a sequential increase of 42%. Webauction.com sales were $5.6 million for the quarter compared to $8.8 million in the third quarter of 1998, representing a sequential decrease of 36%.
In commenting on the Company's internet opportunities, Mr. Godfrey stated, "We are very pleased with the continued growth of our core internet commerce site, Warehouse.com. We are in the process of substantially upgrading the site with the introduction of person-to-person auction capability, personalized start page capability including news, stock quotes, maps and information and a free web-based e-mail service. In addition, we have expanded our product offering to include approximately 2,000 best-selling book titles at discount prices."
1998 Full Year Results
Net sales for the year ended December 31, 1998 were $2.22 billion, up 4.4% from $2.13 billion in the comparable period a year ago. The Company reported net income of $46.0 million or $1.30 per share compared to net income of $28.5 million or $0.83 per share in 1997. The 1998 results exclude an after-tax charge of $15.8 million or $0.45 per share relating to the settlement of the Inmac shareholder litigation. The 1997 results exclude after-tax charges of $12.7 million or $0.37 per share for the settlement of shareholder and derivative litigation and $52.5 million or $1.52 per share in restructuring costs and goodwill write-offs. Internet-related sales for the year were $186.6 million, an increase of 277% from $49.5 million in 1997.
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The Motley Fool's Market Movers (Downs)
February 17, 1999/FOOLWIRE/ -- PC maker and direct-seller Dell
Computer (Nasdaq: DELL) dropped $7 3/4 to $81 after announcing fiscal fourth
quarter earnings of $0.31 a share, up 64% from a year ago and meeting
analysts' expectations. Revenues increased 38% to $5.17 billion, falling
short of analysts' projections as well as the 56% average growth rate in the
preceding eight quarters. Dell also announced a 2-for-1 stock split
effective March 5. For more on Dell's earnings, see last night's Evening
News. The company's conference call is available on its website.
Among other PC makers, Hewlett-Packard (NYSE: HWP) moved back $1 5/16 to $69
3/16 after it said fiscal first quarter earnings increased to $0.92 a share
from $0.86 a year earlier, topping First Call's analysts' mean estimate of
$0.83. The computing giant reported a mere 1% increase in revenues and
warned that "there are many reasons for continued caution, given the
economic environment." In its conference call, HP said it expects Q2 sales
to rise just slightly year-over-year -- between 1% and the mid-single digits
-- and fiscal 1999 sales growth on the low end of its earlier projection of
an 8% to 10% gain.
Computer products direct marketer Micro Warehouse (Nasdaq: MWHS), which
announced the launch of Computersbynet.com, an Internet-only computer
discount retailer to complement its full-service Warehouse.com and
Webauction.com, lost $2 13/16 to $26 1/4 this morning. Q4 EPS was $0.38,
down from $0.21 last year and beating the Street's $0.05 estimate. Gross
margins were essentially flat with year-ago and Q3 levels at 16.4%. |
