Here is the press release warning of lower earnings:
Friday November 21, 8:47 am Eastern Time
Company Press Release
Micron Electronics, Inc. Anticipates Lower First Quarter Earnings
NAMPA, Idaho--(BUSINESS WIRE)--Nov. 21, 1997--Micron Electronics, Inc. (the ''Company'') announces that it expects results of operations for its first quarter of fiscal 1998, ending on November 27, 1997, will reflect a modest increase in net sales compared to the fourth quarter of fiscal 1997, but will reflect significantly lower net income.
Micron Electronics anticipates that consolidated net sales for the first quarter of fiscal 1998 will be nearly 30% higher compared to the first quarter of the preceding year and approximately 10% higher than the fourth quarter of fiscal 1997. Although the growth in unit sales of PC systems is expected to reflect an approximate 30% increase compared to the same period in fiscal 1997, this level is lower than previously expected by the Company. As a result, the Company's inventories of PC components increased compared to the level on hand as of the Company's fiscal year end. The high level of inventories in conjunction with increasing price pressure, particularly on notebook products, is expected to adversely affect the Company's gross margin for the first quarter of fiscal 1998. In addition, the Company's selling, general and administrative expense is expected to be higher as a percentage of net sales for the first quarter of fiscal 1998 compared to the fourth quarter of fiscal 1997.
As a result of these factors, the Company's management currently expects net income for the first quarter of fiscal 1998 to be minimal.
This press release contains forward looking statements with respect to, among other things, future results of the Company's operations. Such forward looking statements are subject to a number of risks and uncertainties which could cause actual results to differ materially from those anticipated. Such risks and uncertainties include, without limitation, industry competition, failure to accurately predict inventory usage, fluctuating market pricing for PCs and semiconductor memory products, fluctuating component costs, changes in product mix, inventory obsolescence, the timing of new product introductions by the Company and its competitors, availability and pricing of the memory components used by the Company's SpecTek semiconductor memory products operation, the timing of orders from and shipments to OEM customers, seasonal government purchasing cycles, manufacturing and production constraints, the effects of product reviews and industry awards, seasonal cycles common in the PC industry, critical component availability, the failure by the Company to successfully integrate the operations of NetFRAME and failure to achieve acceptable profitability of the Japan PC operations. Additional risks are detailed in the Company's filings with the Securities and Exchange Commission, including its report on Form 10-K for the year ended August 28, 1997.
Micron Electronics, Inc., and its subsidiaries manufacture electronic products and provide services for a wide range of computing and digital applications. The Company develops, markets, manufactures and supports PC systems for consumer, business, government and educational use. In addition, the Company is a supplier of multi-processor network servers for enterprise, remote office and distributing computing environments under the NetFRAME brand name. The Company's contract manufacturing operation, Micron Custom Manufacturing Services, Inc., specializes in the assembly of custom complex printed circuit boards, memory modules and system level products for original equipment manufacturers. The Company's SpecTek semiconductor memory products operation processes and markets various grades of memory products under the SpecTek brand name. Micron Electronics, Inc. common stock trades on the Nasdaq Stock Market under the symbol MUEI. The Company is majority owned by Micron Technology, Inc. Product information is available by calling 1-800-515-9197 or via the Micron Electronics home page on the Internet at www.micronpc.com .
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