About the same,, BUT VERY GOOD!
NAMPA, Idaho--(BUSINESS WIRE)--Sept. 27, 1999--Micron
Electronics, Inc. (www.micronpc.com) (Nasdaq:MUEI), a leading direct
vendor of personal computers and related services, today announced
that 1999 fourth quarter net income was $13.7 million, or $0.14 per
diluted share, compared with net income of $7.2 million, or $0.08 per
diluted share, in the fourth fiscal quarter of 1998, excluding the
impact of reducing fourth quarter 1998 contingency accruals of $0.09
per diluted share. Revenue for the fourth fiscal quarter of 1999 was
$333.1 million compared with $339.0 million in the fourth fiscal
quarter of 1998. During the third fiscal quarter of 1999, the company
reported net income of $7.0 million, or $0.07 per diluted share, on
net sales of $327.7 million.
Highlights for the quarter include:
-- Strong Gross Margins. PC gross margin improved to 17.6% from
15.5% in the third quarter, and SpecTek gross margin improved to
46.1% from 38.8% in the third quarter.
-- Industry-Leading Asset Management. Reinforcing the operational
efficiencies of the "direct model," Micron's PC business reduced
day's sales of inventory (DSI) from 5 days to an industry-leading
4 days, increased annualized inventory turns to 81, and
maintained an industry-leading cash conversion cycle of negative
22 days.
-- Demand for Services. Computer services as a percent of PC revenue
increased 100 basis points over the third quarter with service
attach rates of 44% - reflecting the company's successful
emphasis on delivering "beyond-the-box" solutions.
-- Growth in SpecTek Semiconductor Business. Micron's SpecTek
division revenue increased 40.9% from the third quarter and
108.1% year-over-year.
-- Execution of e-Services Strategy. Micron's
business-to-business e-services strategy was marked by the
acquisition of NETLimited, Inc., d/b/a HostPro - an
award-winning Web and applications hosting provider. HostPro
was named the No. 1 Web hosting company for the eighth time
this year by HostIndex.com, the world's largest web hosting
directory, and has held the top spot in the HostIndex.com
top 25 for the past two months based on its innovative
e-commerce and Web hosting solutions and capabilities.
HostPro has averaged monthly revenue growth of more than 10
percent in the past two years and year-on-year revenue
growth of more than 200 percent, making it one of the
fastest growing providers of Web-hosting services. Micron
also acquired the assets of Micron Internet Services - a
provider of dedicated, nationwide dial-up and broadband
Internet access; virtual private network (VPN) solutions;
and e-commerce services to small and medium-sized
businesses, public organizations and consumers.
"As we enter our new fiscal year we will be leveraging the
strategic moves we made last quarter to build an e-infrastructure for
ourselves and our customers. The acquisitions of HostPro and Micron
Internet Services will be the building blocks of our new economic
model," stated Joel Kocher, chairman and chief executive officer of
Micron Electronics, Inc. "This transformation enables us to even
better service small and medium-sized companies and government
customers who are looking for e-services solutions but cannot afford
to make the enormous investments in e-infrastructures necessary to win
in today's new economy."
"Although we made some progress late in the quarter, we continue
to be challenged by the performance of our consumer business,"
explained Kocher. "To meet the shifting dynamics of the
consumer market we will be integrating our e-services offerings to
better position ourselves in this segment."
Net income for fiscal 1999 was $36.5 million, or $0.38 per
diluted share, compared with a net loss in fiscal 1998 of $46.5
million, or $0.48 per diluted share, excluding the gain of $94.5
million net of tax, or $0.98 per diluted share, from the sale of 90%
of the company's wholly-owned contract manufacturing services
subsidiary (MCMS). Net sales for fiscal 1999 were $1,437.8 million
compared with fiscal 1998 net sales of $1,591.7 million, which is
adjusted to exclude net sales for MCMS of $141.7 million.
The company's consolidated gross margin in the fourth quarter of
fiscal 1999 was 23.0%, compared with the 18.7% reported in the third
quarter of fiscal 1999 and 22.2% in the fourth quarter of fiscal 1998.
The company's PC gross margin in the fourth quarter of fiscal 1999 was
17.6%, compared with 15.5% in the third quarter of fiscal 1999 and
18.0% in the fourth quarter of fiscal 1998, excluding the $12 million
favorable impact from reducing contingency accruals. The increase in
PC systems gross margin from the third quarter of fiscal 1999 is due
to continued strong product line management and the favorable mix
impact from higher resale of services. SpecTek's margin was 46.1%,
compared to 38.8% in the third quarter of fiscal 1999 and 26.2% in the
fourth quarter of fiscal 1998.
Unit shipments of the company's PC systems increased 4.3% in the
fourth quarter of fiscal 1999 compared with the third quarter of the
fiscal year, but net sales decreased 4.6%, primarily as a result of an
8.3% decline in average selling prices during the period. For the
year, unit shipments of PC systems remained constant, as compared with
fiscal 1998, normalized for 1998's 53-week fiscal year. Average
selling prices for fiscal 1999 declined 11.7% compared with fiscal
1998. Net sales of SpecTek semiconductor memory products for the
fourth quarter of fiscal 1999 were 40.9% higher than sales in the
third quarter of fiscal 1999, resulting in a year-over-year revenue
increase of 108.1%.
Our industry-leading asset management strengthened during the
quarter, including day's sales of PC inventory at 4 days, annualized
PC inventory turns of 81, and PC cash conversion cycle of negative 22
days.
Selling, general and administrative expenses for the fourth
quarter of fiscal 1999 were $56.7 million compared with $53.8 million
for the third quarter of fiscal 1999 and $56.8 million in the fourth
quarter of fiscal 1998. SG&A expenses for the fourth quarter increased
sequentially $2.9 million compared with the third quarter, primarily
due to costs associated with the operations of Host Pro and increased
personal computer marketing expenditures. As a percentage of sales,
fourth fiscal quarter SG&A expenses were 17.0% compared with 16.4% for
the third quarter of fiscal 1999 and 16.8% in the fourth quarter of
fiscal 1998.
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