OPTi sees 2Q loss, sales decline

Electronic News, March 25, 1996

Milpitas, Calif.--For 2Q96 ended March 31, 1996, OPTi Inc. expects to report sales about 10-20 percent lower than in 2Q95. Also expected is a net loss of 25-35 cents per share for the latest quarter and possibly the following one.

Sales for FY96 are expected to be "flat to down" versus FY95, and the company will have a net loss for the year, OPTi stated.

The anticipated revenue decline is primarily due to a softening in demand for the firm's Pentium chipsets into the desktop marketplace. The net loss for the quarter ended March 31, 1996 will also reflect customer "de-commitments" on some previous generation products, OPTi said.

Financial results for the upcoming quarter ending March 31, 1996 and for the year will fall significantly short of the range of analyst estimates and of its internal targets, the company said.

Gross margins for the quarter ending March 31, 1996 will be down versus 4Q95 "due to unforecasted adverse product mix, reduction in sales price of the company's products, and higher than forecasted overhead costs as a percentage of revenue."

CEO Jerry Chang said: "While demand for our notebook and audio products has met our expectations, demand for our desktop products has fallen off significantly, resulting in a need to adjust our FY96 forecast, and we anticipate a financial loss for 1996. Our financial position remains strong and we plan with our design team and available capacity to rebound in 1997."

President Stephen Dukker added: "The company has begun to experience the softness in demand that is being forecasted for the PC industry. As such, the company anticipates that there will be increased price pressure upon its products which will make it increasingly difficult to sustain gross margins. In addition, the company is currently in the process of completing and testing its new generation chipset, Viper Max. We are also in the process of redesigning certain of our products and engineering new products to take advantage of technologies we have in-house in order to effectively compete in these new market conditions."