Maxtor reports diluted profit of $0.17/sh for quarter in line with expectations. Unanticipated aggressive pricing competition expected to put significant downward pressure on next quarter profits. Uh oh.
biz.yahoo.com
>>>>>>>>
MAXTOR ANNOUNCES FINANCIAL RESULTS FOR FIRST QUARTER FISCAL 1999
Company Continued Unit Growth in Seasonally Weak March Quarter
MILPITAS, Calif., April 22 /PRNewswire/ -- Maxtor Corp. (Nasdaq: MXTR)
today reported sales of $681.6 million for its first fiscal quarter
ended April 3, 1999, an increase of 24% from the $549.6 million
reported in the same quarter a year ago. Net income for the quarter
was $17.0 million or 17 cents per share, diluted, compared to a net
loss of $10.3 million in the first quarter of fiscal 1998.
"We are pleased with our results in what is typically a seasonally soft
quarter for our industry," said Mike Cannon, Maxtor's Chief Executive
Officer. "We were able to increase our unit shipments from the
seasonally strong December quarter to over 5.5 million units for the
quarter, and we continued to broaden our customer base. In addition to
initiating shipments to two new customers among the world's leading
desktop PC OEMs, we increased our penetration of the distribution
channel during the quarter as planned.
"Pricing was competitive throughout the March quarter, intensifying in
the last few weeks of the period beyond what we had anticipated," said
Cannon. "This very aggressive pricing environment has continued into
the June quarter. Although we expect to remain profitable, the
greater-than-anticipated price declines we are now seeing will put
significant downward pressure on our earnings in the second quarter
relative to what we just achieved.
"Despite the aggressive pricing environment, we managed inventory well
in the first quarter and benefited from our ongoing efforts to improve
the flexibility and efficiency of our operations. We reduced our
inventory from the prior quarter by $26 million to $127 million,
increasing inventory turns to 17, annualized, for the quarter.
"We are very pleased with the progress we've made on the balance
sheet," said Cannon. "This was the 6th consecutive quarter in which
Maxtor has generated cash from operations. In addition, as a result of
our equity offering in February, we were able to pay our remaining $55
million debt to Hyundai and increase our cash and marketable securities
by $53 million to $280 million at the end of the quarter."
This release contains forward-looking statements concerning the hard
disk drive industry and Maxtor's results. These statements are based
on current expectations and are subject to risks and uncertainties
which could materially affect the company's results, including, but not
limited to, market demand for hard disk drives, the company's ability
to execute future production ramps and utilize manufacturing assets
efficiently, pricing, and actions by competitors. These and other risk
factors are contained in Maxtor's most recent Prospectus as well as in
its 10-K for fiscal 1998 and its recent 10-Qs.
Maxtor's annual meeting of shareholders will be held on August 11,
1999, at a time and location to be determined.
About Maxtor
Maxtor Corp. (Nasdaq: MXTR) is a leading supplier of hard disk
drives for desktop computer systems. The Company is the fastest
growing supplier of hard disk drives for the desktop personal computer
market, more than doubling its market share over the past 1 1/2 years.
Maxtor has built its leadership position by consistently leading the
industry in bringing new products to market, while delivering the
highest levels of quality and customer support. The Company's current
products include the 5400 RPM DiamondMax(TM) 4320 and DiamondMax 3400
families and the 7200 RPM DiamondMax Plus 5120 series of drives. More
information about Maxtor and Maxtor products can be found at
maxtor.com and the Company can be reached toll-free at (800)
2-MAXTOR.
MAXTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except share and per share amounts)
(Unaudited)
Three months ended
April 3, 1999 March 28, 1998
Total revenue $681,590 $549,617
Total cost of revenue 595,177 487,362
Gross profit 86,413 62,255
Operating expenses:
Research and development 46,840 33,372
Selling, general
and administrative 19,920 15,923
Stock compensation expenses 865 14,696
Total operating expenses 67,625 63,991
Income (loss) from operations 18,788 (1,736)
Interest expense (3,680) (8,768)
Interest and other income 4,897 274
Income (loss) before
provision for income taxes 20,005 (10,230)
Provision for income taxes 3,000 89
Net Income (loss) $17,005 $(10,319)
Net income (loss) per
share - basic $0.17 $(672.16)
Net income (loss) per
share - diluted $0.17 $(672.16)
Shares used in per share
calculation
-basic 98,912,770 15,352
-diluted 101,515,783 15,352
MAXTOR CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
April 3, December 26,
1999 1998
(Unaudited) (Audited)
ASSETS
Current assets:
Cash and marketable
securities $280,390 $227,629
Accounts receivable, net 225,235 317,758
Inventories 127,095 153,192
Prepaid expenses and other 56,261 45,198
Total current assets 688,981 743,777
Net property, plant
and equipment 113,122 108,290
Other assets 7,878 11,346
Total assets $809,981 $863,413
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $5,258 $5,261
Accounts payable 329,487 427,737
Accrued and other
liabilities 94,764 115,937
Total current liabilities 429,509 548,935
Long-term debt 85,031 145,046
Total Liabilities 514,540 693,981
Total Stockholders' Equity 295,441 169,432
Total Liabilities and
Stockholders' Equity $809,981 $863,413
SOURCE Maxtor Corp.
-0- 04/22/99 /CONTACT: Catherine Hartsog,
Investor Relations for Maxtor Corp., 408-432-4458,
catherine_hartsog@maxtor.com/
/Web site: maxtor.com (MXTR)
CO: Maxtor Corp. ST: California, Colorado, Minnesota IN: CPR SU:
ERN
<<<<<<<<<<<< |
