PC direct marketer Micron Electronics Inc has reported second- quarter results in line with its earlier warning and revised Wall Street expectations. The Nampa, Idaho-based company posted net income of $4.2m on revenue down 24.5% at $373.6m, compared to net income of $24.8m in the year-ago period. Earnings per share fell to $0.04 from $0.26 for the quarter. Results for the quarter include a restructuring charge of $3.9m, or $0.03 per share, related to the closure of the company’s Japanese operation. Results for the year-ago quarter include gain of $156.2m on the sale of the contract manufacturing business. Six-month net income fell 38.7% to $15.8m on revenue down 26.2% at $777.1m. Earnings per share dropped 40.7% to $0.16 for the six months.
The results echoed the company’s earlier warning that the second quarter would suffer a 7% sequential revenue decline due to an anticipated seasonal slowdown in the strategic government segment; continued industry pricing pressure in its consumer business and purchase deferrals from the early promotion and late-quarter timing of Intel’s Pentium III processor introduction. Net sales of PC systems declined in the quarter as a result of a 14% decrease in unit sales which was partially offset by a 4% increase in average selling prices. On the bright side, Micron said it saw solid growth in its mid-market commercial PC business with second fiscal quarter sales increasing by more than 20% over the first quarter. And sales of SpecTek semiconductor memory products were 27% higher sequentially.
Gross margin for the quarter was 17.0%, compared to the 17.1% in the first quarter and 0.9% in the second quarter of fiscal 1998. PC gross margins, meanwhile, were 13.8%, compared to 15.0% in the first quarter and a negative 1.6% in the year-ago quarter. SpecTek’s margin was 37.7%, compared to 36.4% and 15.9%, respectively. Selling, general and administrative expenses for the quarter rose $3.8m sequentially to $56.2m due to field sales force expansion, seasonally higher service and support costs in the consumer segment, and higher advertising expenses in conjunction with the early promotion of the Pentium III.
