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  1. Technology
September 22, 1995

MONTGOMERY

By CBR Staff Writer

Proving that demand for semiconductors remains insatiable, chip maker LSI Logic Corp’s executive vice-president Brian Halla told the Montgomery Securities investment conference in San Francisco that the company had not experienced any summer slowdown and did not expect any tail off in the autumn, so that he expected revenues by the end of the year to be 40% above last year’s, beating the 20% to 25% increase expected for LSI’s segment of the chip industry, application-specific integrated circuits: revenues were likely to grow 6% to 8% consecutively from the last quarter; chief executive Wilf Corrigan said sales had been surprisingly solid in geographic areas that are economically weak, like Japan, which is still in a recession; he added that LSI expects capital spending of about $400m for 1995.

Another company benefitting from demand for components is Micron Technology Inc, seller of dynamic RAM memory chips, which sees the shortage in these chips continuing and prices staying static: year-long shortages and subsequent high prices have driven up earnings and shares of dynamic RAM makers, but the markets have been increasingly nervous about how long the shortage will last, especially since most chip makers such as Micron, NEC Corp, Texas Instruments Inc, are adding significant amounts of production capacity; evidence has appeared that the shortage in static RAMs is ending and prices for this type of memory have been falling leading to a fall in the shares of static RAM makers; however, Micron said it did not believe dynamic RAMs would follow suit although it would not say how long the shortage would last, insisting it was too hard to predict the market, but added that Japanese dynamic makers, who command about 45% of the market, had not added capacity, so not too much capacity is being built.

The demand for chips is, of course, good news for the companies that help the chip makers make their chips and Santa Clara, California-based Applied Materials Inc, which makes semiconductor fabrication equipment, expects its fourth quarter earnings will be about 120% higher than earnings in last year’s fourth quarter: chief financial officer Gerald Taylor said he was comfortable with Wall Street estimates in the consensus range of $1.63 to $1.68 a share for the fourth quarter; the company earned $0.73 a share in the fourth quarter of 1994; Taylor said that if the company kept the same market share as it has now, it could grow to an $8,000m company by 2000; but he believed it would gain market share, to become a $10,000m company by that time; in 1994, its r evenues were $1,660m and analysts project that it will end 1995 with slightly more than $3,000m in revenues.

Informix Corp chief executive Phil White said his company, Hewlett-Packard Co and GemPlus will next week unveil, at the Telecom 95 conference in San Diego, a Smart Card for day-to-day consumer use: however, he gave few details other than to say the Smart Cards would be used as a credit, bank and telephone calling card, and for such things as tracking mileage; Informix will supply the database server software that manages data for the services and encryption software to protect transactions, White said; Hewlett-Packard will supply the hardware and GemPlus the cards.

And Informix Software Inc chief executive Phillip White went on to say that he saw no slowdown in the database server software market and estimated it growing at 30% plus yearly; but he would not say if he expects the company to continue the 55% yearly sales growth of recent quarters, a question which became relevant last week when Oracle Corp surprised Wall Street with overall revenue growth of just 39% in its quarter just ended (CI No 2,751); those rates compared with an average 50% growth the company had posted for sales previous quarters; White said Informix sees great opportunity in the weakness that Oracle experienced in Europe last quarter, when it was changing European management; the latest version of Informix’s database, NewEra 2.0, will go on sale next month

and NewEra 3.0, with embedded object-oriented technology, will be available at the end of the year; he added that the company will also ship its workgroup server software for Windows NT in the next quarter; a Unix version is planned for 1996.

Sybase Inc said its long-awaited System 11 Database software is on target for fourth quarter release and that sales of it will help put the company back in the black: it reported a second quarter loss of $9.2m, against a profit of $17.9m a year earlier (CI No 2,702); the company said beta testing had shown the product had achieved 90% scalability with greater than 12 processors; lack of scalability of the previous version had hurt the company’s reputation; chief executive Mark Hoffman promised that We are going to be very competitive, and like Phillip White over at Informix Inc, Hoffman said that he saw no shrinkage in the database market.

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Macromedia Inc said it was comfortable with earnings estimates ranging from $0.99 to $1.10, with a consensus $1.07 for its fiscal 1996 to March: the company expects to see sequential revenue growth of 13% to 14%; it reported earnings of $0.56 per share, before merger charges, on revenues of $53.7m.

At the Montgomery investment conference, Intuit Inc was demonstrating its on-line banking venture, which is due to start October 26, Reuter reports, but chairman Scott Cook admitted that one key ingredient for the venture’s success was still missing – consumers: he that said it would take a while before they wanted to bank from their personal computers but said the company’s success did not depend on early adoption by them: We take on things that we think will be big in a five-year time frame, he said adding that for the success of the scheme iIt takes millions of consumers willing to use personal computers for personal finance; you’ve got to have financial institutions, and you’ve got to have financial applications – we have all these pieces; another company that would like to have all these components is Microsoft Corp, which tried to buy Intuit so that between them they could provide on-line banking but was prevented from so doing by the US Justice Department.

Cyrix Corp said it is on target to ship larger quantities of its M1 Pentium-killer processor next quarter, Dow Jones & Co reports: it has already shifted several thousand M1 chips during this quarter; the company will stop shipping Cx486 chips by the end of this quarter or early in the fourth quarter as it moves its focus to the M1 and another new chip, the 5×86; Jim Chapman, senior vice president of sales and marketing, said a slower market for Cx486 processors is leading to higher inventories among producers and that was a recipe for severe price decline; the company’s revenues in the first half of this year were almost completely derived from sales of its Cx486 chips, but it expects the 5×86 will produce substantial revenues in the current quarter; Chapman projected that the processor market would be worth $13,000m in 1995, creating big opportunities for Cyrix with the 5×86; analysts’ consensus estimates for Cyrix’s third quarter earnings to September 30, is for $0.07 per share based on a range going from a loss of $0.05 to a profit of $0.15

Walnut Creek, California-based Peoplesoft Inc says it is comfortable with analysts’ consensus estimates of 96 cents a share for 1995: chief executive and president Dave Duffield said the company is experiencing no slowdown in its pace of business and that the size of deals continues to increase: Version 5.0 of the PeopleSoft software will be released by the end of the month and includes new human resource features and workflow processing; the company also said it has seven new application modules for the manufacturing market on target for beta testing in the first half of 1996 and its application modules will be available for AS/400 systems in 1996.

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