OAKT 4Q results: biz.yahoo.com
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Thursday January 22, 4:17 pm Eastern Time
Company Press Release
Oak Technology Announces Q2'98 Results and Business Unit Restructuring
Company to Focus on Three Core Markets and Divest Its Interests in
PC Audio and Graphics
New President and New Addition to Board of Directors
Up to Two Million Share Stock Repurchase Authorized
SUNNYVALE, Calif.--(BUSINESS WIRE)--Jan. 22, 1998-- Simultaneously with releasing its fiscal second quarter results, Oak Technology (NASDAQ:OAKT - news) today announced that it would refocus its efforts by concentrating on three core markets: Optical Storage, Consumer Electronics and Digital Office Equipment and therefore, will divest its graphics and audio businesses. The Company also announced that it has elected a new president and a new member to its Board of Directors. Furthermore, the Company announced its Board of Directors has authorized the repurchase of up to two million shares of its Common Stock.
RESULTS FOR Q2'98
The Company today reported results for the second fiscal quarter of 1998 ending December 31, 1997. Net sales for the quarter were $49.4 million, an increase of 4 percent over the second fiscal quarter of 1997 net sales of $47.6 million. Net income of $7.6 million compares to net income of $13.2 million in the comparable period of fiscal 1997. Diluted net income per share of $0.18 compares with net income of $0.31 per diluted share in the second quarter of fiscal 1997. Net income for the quarter ending December 31, 1997 includes non-operating income of approximately $4.8 million or $0.07 per diluted share net of taxes, resulting from a favorable legal settlement. Net income for the second quarter of fiscal 1997 includes the impact of favorable inventory-related adjustments of approximately $14.5 million to cost of revenues.
The Optical Storage business continued to account for the largest portion of Oak's business, representing approximately 80 percent of the Company's revenues during the fiscal second quarter. The business continues to experience pressure from new competitors entering the market, pressure from the sub-$1000 PC segment for lower-cost components, and the effects of a strong dollar versus Asian currencies. Due to these factors as well as lower PC unit demand after the holiday season, the Company expects it may incur a loss from operations in the March quarter.
FOCUS ON THREE CORE MARKETS; DIVESTITURE OF PC AUDIO AND GRAPHICS INTERESTS
The Company has made a strategic decision to focus all its resources on its three core markets: Optical Storage, Consumer Electronics, and Digital Office Equipment. As a result of this decision, the Company plans to divest its interests in PC audio and graphics.
''In order to extend our leadership positions in the Optical Storage and Digital Office Equipment markets and expand our presence in the Consumer Electronics market, we have decided to focus all of our resources on these strategically important core markets,'' stated David D. Tsang, chairman and chief executive officer of Oak Technology. ''For our PC audio and graphics divisions, we are actively seeking interested parties that can leverage these businesses with their own to achieve maximum value,'' further stated Tsang.
''Our PC audio and graphics businesses combined accounted for less than 5 percent of this quarter's revenues and approximately 20 percent of operating expenses,'' continued Tsang. ''The audio and graphics semiconductor markets are highly competitive and we believe they offer limited opportunities for Oak. We also believe that there is value in what we have developed and that for the right company, acquiring these businesses can offer a tremendous head start.''
ADDITIONS TO THE EXECUTIVE MANAGEMENT TEAM AND BOARD
The Company also announced today Mr. Richard Black will join Oak's executive management team as president. Mr. Black joined the Company's Board of Directors in 1987 and will continue to serve as a director. He has been president and CEO of three large companies, two with sales in excess of one billion dollars. His management experience spans diverse fields such as electronic publishing equipment and software, networking hardware, semiconductors, and interactive video software.
The Company also stated that it has added Mr. Young Sohn, president of Quantum Corporation [Nasdaq:QNTM - news]'s Enterprise and Personal Storage Group, to its Board of Directors. Mr. Sohn was president and managing director of Quantum Asia-Pacific until June 1994. Prior to joining Quantum in 1992, he spent nine years as a marketing and sales executive at Intel Corporation [Nasdaq:INTC - news].
''I am excited to announce these new additions to the Oak team,'' said Tsang. ''With Rick as part of the executive management team, I expect to concentrate on strategic direction and key customer relationships while Rick will be responsible for the day-to-day operations of the Company. In addition, we look forward to utilizing Mr. Sohn's industry experience on our Board to help guide the Company as we move forward.''
STOCK REPURCHASE PLAN
The Company's Board of Directors today approved a stock repurchase plan authorizing the purchase of up to two million shares of Oak Technology Common Stock. Repurchases will be made from time to time in open market or privately negotiated transactions. The plan authorizes, but does not require, Oak to purchase all two million shares. Actual repurchases in any period will depend on market conditions and other factors and could be in substantially lesser amounts. The repurchase program is authorized for one year, unless further extended by the Board.
BUSINESS REVIEW FOR SECOND FISCAL QUARTER '98
Optical Storage
During the quarter, the Company demonstrated its continued commitment to expanding its product offerings as well as achieving higher levels of product integration in Optical Storage. The OTI-9325, announced in the second quarter, is an integrated, high-performance three-in-one CD-ROM controller. Although integrated products have higher ASPs (average selling prices) than the Company's single-function products, gross margins will continue to come under pressure from the competitive environment of this market. During the quarter, the Company continued to ship its OTI-975 CD-RW controller which is used in leading CD-RW drives in the market today, and sampled the OTI-9800 DVD-ROM controller.
Consumer Electronics
The Company's Consumer Electronics business comprises Oak's existing MPEG-1 decoders used in VideoCD players, MPEG-2/Dolby Digital decoders for the DVD player market, and DVD navigation software. This month, Oak announced the OTI-257, a highly integrated, low-cost solution for VideoCD players including karaoke support. ''Oak is committed to investing the necessary resources to be competitive in this market and we intend to leverage our MPEG technology with our strong Optical Storage expertise to deliver complete solutions for this developing market,'' explained Tsang.
Digital Office Equipment
Oak believes the Digital Office Equipment market offers growth opportunities and is pursuing these through its Pixel Magic subsidiary. During the quarter, Pixel announced design wins at JetFax and Xerox. Last month, Pixel announced the signing of a letter of intent to acquire Xerographic Laser Images (XLI) which develops products that produce enhanced resolution output from printers, copiers, fax systems and multifunction peripherals. The Company expects to complete this acquisition by the end of its fiscal year.
The foregoing statements contain forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Factors that could cause actual outcome to differ materially from those set forth include, without limitation, market conditions in the personal computer and semiconductor industries, the degree of competitiveness of the Company's customers, levels of inventory held by the Company's customers, the rate at which the PC industry moves to higher speed drives as well as DVD-ROM drives, and the Company's customers' perceptions thereof, economic conditions in Asia, the Company's ability to control expenses, and other risks that are contained in documents which the Company files with the Securities and Exchange Commission. For a discussion of such risks, see the Company's most recent SEC form 10-K and 10-Q.
ABOUT OAK TECHNOLOGY
Founded in 1987, Oak Technology, Inc. designs, develops and markets semiconductors and related software to original equipment manufacturers worldwide who serve the optical storage, consumer electronics and digital office equipment markets. Oak has a software design center in Boca Raton, Fla.; a mixed signal design center in Austin, Texas; and subsidiaries in Japan (Oak Technology K.K.), Taiwan (Oak Technology, Taiwan), and Andover, Mass. (Pixel Magic, Inc.). The Company completed its initial public offering in February 1995. Additional information about Oak Technology and its products can be found on the World Wide Web at www.oaktech.com.
Oak Technology and the Oak logo are registered trademarks of Oak Technology, Inc. Pixel Magic is a trademark of Oak Technology. All other product names or Company names are mentioned for identification purposes only, and may be trademarks of their respectiv |
