Number Nine: OEM sales drop off

Electronic News, Oct 16, 1995

Lexington, Mass.--Delays in delivery of VRAM memory components and lower than expected OEM sales will result in sales and earnings for the third quarter ended Sept. 30, 1995 being less than forecast by analysts, said Number Nine Visual Technology Corp.

Number Nine, a manufacturer of video/graphics accelerator subsystems, chips and software, estimated that sales for the three months would be approximately $23.5 million, a 24 percent increase from the third quarter of 1994. The company also estimated that earnings per share would approximate break-even, compared to $.09 in the year-earlier period.

"There were two principal factors impacting third quarter sales," said Andrew Najda, president and CEO. "One was lower sales to the company's largest OEM customer. The second factor was delayed delivery to the company of VRAM components. As a result, a significant amount of September orders are now scheduled to ship in October."

Mr. Najda added "We currently expect that OEM sales will increase significantly in the fourth quarter, based on initial orders and discussions with customers. The volume and timing of orders during a quarter is very difficult to forecast, however, and attaining a specific sales level cannot be assured. Our policy is to not discuss order backlog. In this instance, however, we are making an exception to demonstrate the strength of orders on hand, which exceeded $22 million at the end of September."

The company said a key factor affecting fourth quarter sales growth will be its ability to obtain sufficient VRAM supplies. "To alleviate our dependence on VRAM, we are designing several new products based on high-density, advanced memory technology," said Mr. Najda. "These 8- and 16-megabit memory chips replace traditional 2- and 4M VRAM, delivering high-performance graphics while requiring fewer memory chips per board. These products could generate revenues by the first quarter of 1996."

The lower than expected OEM sales more than offset continued increases in two-tier and retail distribution sales, the company said. "Number Nine's year-to-year growth and future prospects remain strong," said Kevin Hanks, Number Nine chief financial officer. "Two-tier and retail distribution sales increased sequentially and should exceed 60 percent of sales for the quarter. We achieved this growth despite limitations on memory component availability."