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Technology Stocks : COMS & the Ghost of USRX w/ other STUFF -- Ignore unavailable to you. Want to Upgrade?

To: Moonray who wrote (14895)	4/20/1998 3:12:00 PM
From: David Lawrence	Read Replies (2) \| Respond to of 22053

NEW YORK -(Dow Jones)- Rockwell International Corp. said Monday that its fiscal second-quarter net income plunged 42% on lower modem sales as a result of severe pricing pressure and lower-than-expected unit sales. However, the results were enough to meet diminished expectations. The electronics company (ROK) posted net income of $109 million, or 53 cents a diluted share, for the quarter ended March 31. That was about in line with analysts' lowered expectations for earnings of 54 cents a diluted share. Before a warning issued by the company last month, analysts thought Rockwell would earn 74 cents a share. A year ago, the company had net income of $189 million, or 85 cents a diluted share, including a gain of $34 million, or 14 cents a diluted share, from discontinued operations. Without that gain, earnings would have been $155 million, or 71 cents a diluted share. Sales rose 2.2% to $1.94 billion in the latest quarter for the Costa Mesa, Calif.-based company. Semiconductor systems recorded an operating loss of $27 million, compared with a year-ago profit of $71 million. Sales dropped 15% to $315 million on severe pricing pressure and lower-than-expected demand as customers withheld orders awaiting release of the company's newer, faster modem. Rockwell said it expects its semiconductor systems unit will return to profitability in the second half, with increased unit volumes across all product platforms more than offsetting continued pricing pressures in modem products. The unit recorded a previously announced $10 million pretax restructuring reserve as it discontinued investments in Digital European Cordless Telephony wireless standards in favor of Global Systems for Mobile Communications and Code Division Multiple Access protocols. Rockwell said the results are "disappointing and well below targets," but that sales of wireless communications and digital infotainment products were up 40% and 36%, respectively, as the company continued its heavy investments in non-modem product lines. The avionics and communications business had a 35% increase in operating earnings to $77 million as the company capitalized on strong commercial aircraft markets in North America. Sales rose to $496 million from $416 million. Operating earnings in the automation segment were flat with a year ago at $147 million as strong growth in Latin America offset lower sales in Asia-Pacific. Sales rose to $1.13 billion from $1.11 billion. The company also reiterated that it sees earnings for all of fiscal 1998 flat with a year ago at about $2.89 a share, but only if the market for its automation products improves and prices moderate for modem products. Twelve analysts surveyed by First Call originally had produced a mean estimate for the company to earn $3.18 a share in 1998, but lowered that to $2.85 after the company's warning last month. The modem troubles surfaced last yearafter Rockwell and its principal competitor, U.S. Robotics Corp., now a unit of 3Com Corp. introduced new, incompatible modems that promised to operate almost twice as fast as the V.34 standard. Losses in this modem war were substantial and recovery has been far slower than expected. The battle itself has been resolved with the acceptance of a new, compatible V.90 standard late last month. Copyright (c) 1998 Dow Jones & Company, Inc. All Rights Reserved.