Dell Computer Corp could sell more systems if it weren’t constrained by shortages of component supplies, chairman and chief executive Michael Dell told the Bear Stearns technology conference in New York, adding Business is great, very strong, particularly in the corporate market: Dell said the company plans to spend two-thirds of its research and development budget on notebooks and servers, which now comprise 20% of systems revenues.
Another company complaining about component shortages was Cisco Systems Inc, whose president and chief executive John Chambers told the conference that a lack of a range of memory used in network hardware in the networking industry was facing most manufacturers, but he was able to reassure his hosts that his company’s supply remains secure.
And testifying to the fact that it’s a memory maker’s market, Micron Technology Inc said it’s enjoying continuing high demand for its products: vice-president Kipp Bedard said there was a good chance the company would see some gross margin improvement in semiconductor products in the next few quarters.
L M Ericsson Telefon AB said the Indian cellular and public switching market could be the next China in terms of high growth in sales; Lars Jonsteg, vice-president of investor relations, told the Bear Stearns conference that there were encouraging signs of growth in the that market; Ericsson said it has a 40% share of the world market for cellular systems infrastructure, but expected increasingly tough competition, so maintaining this share could be difficult; it had seen sustained sales in China where it has 50% of the cellular switching equipment, and 25% of the public switching market; Jonsteg said the company would be disappointed if it couldn’t garner 30% of the US Personal Communications Services infrastructure, matching its share in the cellular market.
Personal computer input-output specialist Adaptec Inc’s vice-president and treasurer, Chris O’Meara, told the conference the company’s year-over-year earnings reflected the success of its PCI product during the last year: the company reported earnings of $0.33 per share in the June 1994 quarter; president and chief operating officer Grant Saviers said the company’s growth had continued at the expense of its four main but smaller, rivals including QLogic Corp.
General Instrument Corp is working to maintain 30% gross margins over the next five to six quarters as it deploys its next generation of advanced analogue and digital converters for broadband cable and telephone services, said chief financial officer Charles Dickson.
Bay Networks Inc said its sales growth is accelerating and should continue to the end of 1995 and that all sales targets set after Wellfleet Communications Inc and SynOptics Communications Inc merged to form Bay Networks have been met: speaking at the Bear Stearns conference, William Ruehle, chief financial officer, said We clearly have been gaining market share in this past quarter, but he added that the company is in its quiet period when it cannot say too much until results are reported in July; about half of its sales traditionally come from products on the market less than one year, he said; its latest hub product, known as System 5000, now has an installed base of about 800,000 ports, and the company claims to dominate the market among next generation hub products; it expects to sell 500,000 ports of its Distributed 5000 network product by year-end.
Desktop utility software firm Symantec Corp’s president and chief executive Gordon Eubanks told the conference I don’t want to imply business is booming but it’s strong relative to our expectations for the quarter and he said he was comfortable with analysts’ earnings estimates for the first quarter; the firm would deliver Windows95 versions of just about all its products before or shortly after the release of Windows95 in August.
McAfee Associates Inc’s acquisitions, including the purchase of Saber Software Corp earlier this year (CI No 2,674)
, will result in a decline in operating margins over the next few years to somewhere in the high 30s from 45% now, according to president and chief executive William Larson: he said this was a long-term target and was sustainable but Saber could improve its operating margins of about 15% by cutting costs; some improvements will come as Saber shifts to McAfee’s distribution methods, which do not require floppies or paper manuals; he also said that McAfee had room to grow its sales but the expenses associated with this increased effort would result in lower profit margins in the future.
The first company licensed to provide national cellular telecommunications coverage in the US, American Mobile Satellite Corp, expects its period of losses to end and for it to break even in the third quarter of 1996, chief executive Brian Pemberton told the conference: he said the nationwide speech and data service, targeted at remote, mobile and air-and sea-based users, should begin in the next quarter.
National Semiconductor Corp has experienced unexpected strength in sales instead of its traditional summer fall-off in orders, which it has experienced almost every year in its history, said the company.
Continuing its recovery from the setback dealt it by the veto on Microsoft Corp acquiring it, Intuit Inc says it is targeting future annual sales growth of 30% and operating profit growth of 10% to 13%, although in the near-term it will be closer to 10%, said president and chief executive Scott Cook said: he added that efforts to form alliances with banks for a new financial services software product that would enable consumers to shop at home, through a personal computer, for annuities, investments and mortgages, have not been hurt by the failure of the Microsoft deal, and that there were agreements with 15 banks, although he declined to name them; Cook said the entire project would take a decade or more to complete; the company’s leading product Quicken, which made more than half of its revenues in 1991, made less than a quarter in 1994.
Informix Corp expects near-term revenue growth to meet or exceed the 54% pace of its first quarter, fuelled by the early stages of new product cycles both in the database and the development tools markets: for the quarter ended April 2 the company reported net profit of $19.1m, on turnover of $147.8m, compared with $12.5m, on turnover of $96.1m a year earlier: at the Bear Stearns conference, chief financial officer Howard Graham said its database sales grew at a 60% to 70% rate in the first quarter.
Good news for Advanced RISC Machines Ltd? Design wins in the set-top box and wireless communications fields means chipmaker VLSI Technology Inc is expecting a surge of 25% in sales growth in 1995 compared with an even 18% over the past several years, said chief finance officer Gregory Hinckley: he said the company could become a billion dollar a year business by 1997; it has boosted its capital spending plans for 1995 to $200m up from $130m, the bulk of which will go to upgrading its San Antonio, Texas, plant that makes 0.5 micron chips.
With $125m in cash, Broderbund Software Inc says it is looking to buy products or even make a strategic acquisition next year: it expects its gross margins to stay in the low 60%; for the first half of fiscal 1995 it was 61%; and it will release Christmas season CD-ROMs this year, including one based on Dr Seuss books; the CDs accounted for 77% of the company’s first-half sales, an increase from 42% in 1994, a trend expected to continue.
California Microwave Inc, Personal Communication Services radio specialist, is raising its gross profit margin target to 35% from 30% and believes the US microwave radio market will be worth $300m up until 2002 with international markets around $1,500m; it has achieved margins of 28% in the last quarter.
