A while back, I posted a link to the RDRT thread where an analyst gave a run down on the main players in the storage sector. At the time, there was a comment about WDC which I thought interesting.
Western Digital Corporation (3-H)- Over the past 18 months Western Digital struggled with its
transition to MR-based products and, hence, fell behind in time to market and lost market share;
however, the company has made meaningful strides toward regaining share with its recent product
generations. It has been a longer workout period than we originally thought, although we are
encouraged by improved industry conditions and Western Digital's improved operational status
and execution of its road map. The key to Western Digital's return to pr ofitability is its ability to
restore its positioning (including time to market) in its desktop business, as well as execution in and
growth of its enterprise business and continued focus on improved asset management. We
forecast a net loss per share of $0.72 for Western Digital for the March quarter, and expect that
the company will come in line with (or potentially slightly beat) this estimate. At a recent industry
conference, management reiterated its comfort with the consensus loss estimate of $0.67 per share
from operations, despite the fact that units and revenues will probably be lighter than the
company's original guidance--lower volumes are due to slower pulls from one major OEM
customer during February, compounded by slightly slower distribution sell-through (flat, not
down). Other than the one major OEM noted here, all other major OEM customers appear to be
pulling to plan.
Can we assume this "one major OEM" was Compaq? By the way we keep hearing rumblings at Compaq and little bad news from other vendors, that the major cause for concern this quarter might rest with poor sales by Compaq? I wonder if the lack of volume from AMD has had any effect to exasperate this?
Anyway, here's the pre-announce earnings warning.
Compaq Announces Preliminary First Quarter Results
Business Wire - April 09, 1999 16:44
HOUSTON--(BUSINESS WIRE)--April 9, 1999--Compaq Computer Corporation (NYSE: CPQ) announced that, based on preliminary analysis of its results for the quarter ended March 31, 1999, it expects to report results below analysts' estimates. Based upon a $9.4 billion revenue estimate and a less favorable sales mix, the Company now expects to report a profit of approximately $.15 per share.
"The quarter's shortfall reflects lower than anticipated market demand and increased competitive pricing in the commercial PC sector," said Earl Mason, Senior Vice President and Chief Financial Officer.
These statements regarding estimated results are preliminary. The Company expects to announce its final results on April 21, 1999.
Business Outlook
"While market conditions will continue to be competitive, we fully intend to expand our business and grow market share profitably in 1999," said Eckhard Pfeiffer, President and Chief Executive Officer. "We will roll out our enterprise strategy next week as 4,500 customers join us in Houston for Compaq's Innovate 99. The Company will continue its aggressive drive of reduction of cost and operating expenses in the face of a very competitive market."
Company Background
Compaq Computer Corporation, a Fortune Global 100 company, is the second largest computer company in the world and the largest global supplier of computer systems. Compaq develops and markets hardware, software, solutions, and services, including industry-leading enterprise computing solutions, fault-tolerant business-critical solutions, networking and communication products, commercial desktop and portable products and consumer PCs. The Company is an industry leader in environmentally friendly programs and business practices.
Compaq products are sold and supported in more than 100 countries through a network of authorized Compaq marketing partners. Customer support and information about Compaq and its products are available at compaq.com or by calling 1-800-OK-COMPAQ. Product information and reseller locations are available by calling 1-800-345-1518.
This release contains forward-looking statements based on current expectations that involve a number of risks and uncertainties. The potential risks and uncertainties that could cause actual results to differ materially include the implementation of operations and systems improvements, particularly those associated with the Optimized Distribution Model; the operational integration associated with the acquisition of Digital Equipment Corporation; inventory risks due to shifts in market demand; timely development, production, continued competitive factors and pricing pressures; market responses to pricing actions and promotional programs; acceptance of the products; and changes in product mix. Further information on the factors that could affect the Company's financial results are included in its SEC filings, including the Form 10-K for the year ended December 31, 1998.
Compaq, Registered U.S. Patent and Trademark Office. Product names mentioned herein may be trademarks and/or registered trademarks of their respective companies.
More financial information on Compaq is available at compaq.com.
CONTACT: Compaq Computer Corporation, Houston
Jim Finlaw, 281/514-6137
jim.finlaw@compaq.com
or
Investor Relations, 281/514-9549
Investor Relations Fax, 800/433-2391 |
