Tuesday February 24, 6:43 pm Eastern Time
Company Press Release
Micron Electronics Restructures For Maximum Cost-Effectiveness
Provides Revised Outlook on Second Quarter Financial Results
NAMPA, Idaho--(BUSINESS WIRE)--Feb. 24, 1998--Micron Electronics, Inc. (Nasdaq:
MUEI - news), today announced that it has taken several actions to restructure the company to better serve its core markets and maximize its position as a cost-effective, competitive provider of computers through the direct channel. To meet its aggressive new business objectives, the company is consolidating operations domestically and internationally, including the reassignment of approximately 10 percent of its current work force of 4,500 to its parent
company Micron Technology, Inc., (NYSE: MU - news). In addition, the company is consolidating its NetFRAME enterprise server operation currently in Milpitas, California, to its Nampa, Idaho, headquarters.ÿ
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These actions will result in a non-recurring charge in the second quarter ending February 26, 1998. The company also announced it will incur a significant operating loss during the second quarter of fiscal 1998 due in part to the competitiveness in the notebook
market segment.ÿ
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ÿWhile Micron's notebook PCs were very strong sellers and widely
acclaimed within the industry, an overly aggressive forecast caused inventory issues. Other factors contributing to the loss include year over year near-flat revenue, disposition of inventories as well as intense, industry-wide price competition. The company expects the operating loss will be more than offset by the net pretax gain of approximately $150 million realized on the previously announced
sale of its Micron Custom Manufacturing Services (MCMS) subsidiary expected toclose on February 26, 1998.
According to newly appointed Micron Electronics President and COO, and former Dell Computer executive Joel Kocher, ''These actions position Micron Electronics as a leaner, more efficient company better prepared to compete effectively in a very competitive market. We have significantly reduced the level of our operating expenses, and believe we are in a better position to aggressively
promote and price our high performance PCs to our target customer base.'' Certain forward-looking information contained in this press release is being provided in reliance upon the ''safe harbor'' provisions of the Private Securities Litigation Reform Act of 1995 and is based on current management expectations. Factors that could cause future results to differ from these expectations include, but are not limited to, the following: general economic conditions, competitive products and pricing, overall product demand, inventory
risks due to shifts in market demand and forecasting relating thereto, risks related to acquired businesses, new product development, critical component availability, and other risks indicated in the Company's filings with the Securities and Exchange Commission. 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, Micron Custom
Manufacturing Services, Inc., a subsidiary of Micron Electronics, Inc., provides custom contract manufacturing services to original equipment manufacturers. SpecTek, a division of Micron Electronics, Inc., processes and markets various grades of DRAM 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.
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