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July 23, 1997updated 05 Sep 2016 12:39pm

TANDEM TURNS IN GREAT Q3 AHEAD OF COMPAQ MERGER

By CBR Staff Writer

Tandem Computers Inc, which says it has made the requisite filings concerning the proposed merger with Compaq, but is otherwise in a quiet period on the subject, took time out to report third-quarter numbers that undoubtedly made its parents- to-be proud. Net income came in at $43.2m, or $0.36 per share, when Wall Street was only looking for $0.30. Total revenue for the quarter grew 8% to $502.6m, while systems revenue grew 10%. Strong sales of the NonStop Himalaya server line and growing success in the wireless communications sector were largely responsible for the successful results. The company says it is now beginning to realize the strategy it put in place 18 months ago to become a broad, open market player. Windows NT is integral to that strategy and Tandem says that its clustered NT server system, the company’s first true NT product, was virtually sold- out the entire quarter. Total gross margin improved 1.9% to 53.2% and inventory days improved to 38 days from 40 in the second quarter. The telecommunications and financial markets represented 75% of total business. The company’s Unix business, now officially targeted at the telco market, brought in $25m in revenue. Nine-month net income was $81m, or $0.67 per share, on revenue up 4% at $1.41bn, compared to a net loss of $39.7m last year – which included a $52m restructuring charge. Although the fourth quarter will see Tandem trying to absorb merger costs, it feels comfortable with current earnings estimates of $0.51 per share and expects single digit revenue growth. Cash reserves stand at $228m.

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