Data General Corp reported poor first-quarter results that were in line with a warning issued last week (CI No 3,326). The Westboro, Massachusetts company posted net income that plunged 66.3% to $3.5m on revenue up 4.8% at $365.3m. Earnings per share for the quarter fell 72% to $0.07, exactly what the revised First Call consensus was looking for. Original estimates for the quarter had been $0.23 per share. The company is blaming the poor results on softness in its Clariion storage business as result of the ongoing transition to fiber channel technology. DG says that as its customers make the transition, short term revenues for the product line have seen a negative impact. This trend should continue in the current quarter, but sales are expected to strengthen by the second half of the year. The other main detractor from the quarter’s numbers was a decrease in product gross margins to 29.2%, down about two-and-a-half points from the prior quarter. The margin drop came primarily as a result of pricing pressures and a shift in product mix, mostly in the Aviion server line where mid-range system shipments are picking up. Over all, the Aviion line saw sales up 10% year-over-year and revenues for Intel-based systems jumped 70%. Looking ahead, Wall Street is expecting $0.19 per share for the second quarter. Data General shares were down $0.25 at $14.375 in midday trading.
