Network Computing Devices Inc’s (NCD) president and CEO Robert Gilbertson and his chief financial officer Rudy Morin once won an award for ‘turnaround of the decade’ at Data Switch Corp in the 1980s and had vowed to do the same at NCD: once an X terminal maker and now trying to make hay as the sun rises on the network computer. The company’s main claim to fame is its OEM deal with IBM Corp, whereby it manufactures IBM’s Network Stations, based on NCD’s Explora machines. They’ve only been shipping in volume since March 28, but the company said it has shipped $5.4m worth of Network Stations, up from $1.9m worth the previous quarter. Morin predicted this would double in the current quarter. NCD refused to be drawn on how many machines it has shipped, or plans to ship, only to say that it is confident that it can reach the low-end of its dollar volume target for the first year of its contract: $25m. The high-end of the estimate was $75m. There’s no telling what would happen to its top and bottom lines if IBM were to scrap the deal and build the boxes themselves, as we have heard is likely before the year-end. First quarter net profits at the Mountain View, California company were $852,000, against losses of $260,000 last time, which contained a $7.0m non- recurring gain on the sale of Mariner internet tools business to FTP Software Inc. They fell from the $1.1m earnings reported in the fourth quarter from revenues of $32.9m. But there are reason for the revenue fall, claims the company: sales to non-OEM customers, that is, sales of its own-badged machines fell in the quarter because the company is reorganizing its sales team from direct to territorially-managed channel sales; also because NCD started the transfer of monitor sales to resellers, which lowered revenues but left margins unaffected, a claim that doesn’t seem borne out by the figures. Gilbertson expressed frustration at the FUD (fear uncertainty and doubt) besetting the industry while the CIOs of this world wonder if NCs really are the answer to their IT problems and the industry can cross the chasm into widespread NC acceptance. Perhaps the company should buy something. It has $38.5m in the bank that could perhaps be put to use in a more productive way – especially if IBM comes in and takes its machines back in-house. Gilbertson said the company is aware that it has almost $0.02 per share cash at the moment, only earning 6% in the bank, but refused to elaborate on further plans.
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