Week in Review: Top business stories from 3/22-3/26

Electronic News, March 29, 1999

Profits Boost Samsung

Surging exports and a restructuring boosted results for Korea's Samsung Electronics Co. despite difficult market conditions at home. Samsung's total 1998 sales were $16.64 billion versus $13.37 billion in 1997. Net profits jumped 154 percent to $259.50 million. The company also cited stabilized pricing for information and communications products, especially semiconductors, TFT-LCDs, CDMA systems and wireless handsets. Overall exports jumped 30 percent to $11.26 billion, although emerging markets were slow. Domestic sales fell 19 percent to $5.38 billion year over year.

MEI Posts Results

Direct PC vendor Micron Electronics, Inc., reported 2Q99 revenues of $373.6 million versus $403.5 million in 1Q99. Excluding costs linked to closure of Japanese operations, net income was $6.5 million, or 7 cents per diluted share, versus $11.7 million, or 12 cents per share, in the just-prior quarter. Reported net income was $4.2 million, or 4 cents per diluted share. In 2Q98, MEI reported net of $24.8 million, or 26 cents per share, on net sales of $494.8 million. The subsidiary of Micron Technology reported net sales of PC systems declined sequentially in the just-reported quarter mostly due to a 14 percent decrease in unit sales.

Varian Spin-Offs Trading

Varian Associates, Inc. took a step toward completing its revamp into three public firms when shares in its instruments and semiconductor equipment spinoffs began trading on a when-issued basis on Nasdaq. The instruments company, Varian, Inc., uses the when-issued symbol VARIV; the chip equipment entity, Varian Semiconductor Equipment Associates, VSEAV. On the first day, VARIV shares peaked at 13.625 and closed at 11.563; VSEAV hit 13 and closed at 12.75. Meanwhile, shares will be issued on April 2 when the final Vs will be dropped from both symbols.

IBM, Cadence In Synch

Cadence Design Systems, Inc. signed a three-year agreement with IBM, extending and broadening the companies' long-term relationship. Under the pact, Cadence is providing EDA software to IBM, which the company uses along with its own EDA software to design and manufacture semiconductors and circuitry. "Our relationship with Cadence will help IBM expand its technical markets workstation business beyond its traditional stronghold in mechanical CAD," said Lou Bifano, VP, RS/600 Solutions, IBM. The agreement was said to involve several new Cadence technologies.

AT&T Prices $8B Bond Offer

AT&T priced an $8 billion global bond offering; the closing was to occur last Friday. The offer will consist of three tranches, $2 billion in five year notes; $3 billion in 10-year notes; and $3 billion in 30-year notes. Proceeds will repay commercial paper raised in connection with the acquisition of TCI and a recently completed share buyback.

Comcast Buys MediaOne

Comcast announced plans to acquire MediaOne for $53 billion, which would create the country's third largest cable television company. Underlying the move by two of the largest U.S. cable companies is the cable industry's competition with phone companies to offer extremely fast access to the Internet. Together, Comcast and MediaOne will have 10.6 million cable subscribers, 18 percent of the U.S. market, it has been said.

AMI Eyes IPO

As semiconductor market conditions improve, Idaho-based American Microsystems, Inc. is eyeing a public stock offer to raise funds to increase capacity at its Pocatello plant. The company expects to need "hundreds of millions of dollars" for further expansion, it was reported. In 1998, AMI sales were about $270 million, up slightly from the year before. The company is a supplier of mixed signal and digital ASICs. It is and expects to stay a unit of Tokyo's Japan Energy Corp.

3Com Posts Results

3Com Corp. reported sales for the third quarter ended Feb. 26 grew 13 percent to $1.41 billion from $1.25 billion in the year-ago quarter. Driven by acquisitions, net income was $89.7 million versus $13.9 million. The company alluded to slower than expected sales to U.S. businesses through distributors. 3Com acquired U.S. Robotics and spent much of 1998 streamlining inventories and juggling staffing, it has been said. Since then, the company has been in an acquisition mode. 3Com's board has approved a 10 million share buyback.

FSI Sales Off, Loss Logged

FSI International reported sales for its second quarter of 1999 dropped to $33 million from $59.4 million in the same quarter of 1998. Net loss increased to $7.6 million from a net loss of $4.6 million in the same quarter last year. Sequential order rates were hurt by customer postponements. Sales were impacted by customer requested shipment delays, manufacturing delays and other factors, the company said.

Cabletron Loses

Cabletron Systems, Inc. reported fourth quarter net sales of $345.1 million versus $311.5 million in the year-ago quarter. Net loss shrunk to $8.3 million from a net loss of $263.4 million the year before. Figures include a fixed asset loss this year; the year before there were special charges of $257 million. Cabletron reported yearly sales were $1.4 billion versus $1.37 billion last year, with a net loss of $239.9 million versus $127.1 million. The company hopes to save money by outsourcing and a restructure into four business units.