Financial: Sequent Q3 Results - Company Financial Information

Edge: Work-Group Computing Report, Oct 26, 1998

Sequent Computer Systems Thursday reported breakeven results ($38,000 or $0.00 per share) on revenue of $201.4 million for the third quarter of 1998, ended October 3.

In the third quarter of 1997, Sequent earned $10.3 million ($0.24 per share) on revenue of $207.3 million.

"With less than $1 million in product revenue from our largest account -- versus more than $25 million in the third quarter a year ago -- the company's reported results were right in line with our financial targets," said Bob Gregg, Sequent's senior vice-president of finance and chief financial officer. "What the results don't show is that we also hit our unreported bookings target for the quarter, significantly enlarging our backlog position."

The effects of building backlog in the prior quarter were reflected in the company's positive cash flow, sequentially lower receivables, reduced inventories, and a marked reduction in days sales outstanding. Gregg said the company plans to continue expanding its backlog position during the fourth quarter of 1998.

Sequent president and chief operating officer John McAdam said he was pleased with the results in light of the difficult comparison with last year's third quarter and the company's recently completed transition from its Pentium II-based NUMA-Q products to its new Pentium II Xeon-based NUMA product line. "Combined with the seasonal slowness we normally experience in Q3, these other factors increased the difficulty of meeting both our internal financial goals and the expectations of our investors. Thanks to the discipline of the entire organization, we were able to achieve both and hit our development milestones for the new products."

Although the new products will not be announced until Monday, McAdam said the company shipped more than three dozen Xeon-based servers during third quarter and has recently completed industry-leading benchmarks that will be announced with the new products. "Based on all the performance characteristics these products have demonstrated, we believe more firmly than ever that our Intel-based NUMA architecture is the best choice for large-scale UNIX and mixed environment (UNIX and Windows NT) applications. As we roll out our expanding NUMA family over the next two quarters, I'm confident the market as a whole will begin to share an appreciation for Sequent's technology expertise and leadership that several of our largest customers already have."

Sequent Computer Systems (Nasdaq:SQNT), the leader in Intel-based systems for the data center, is committed to the success of its end-user and system integrator customers. Sequent's platform architectures and services are optimized for the scalability, availability and manageability requirements of corporate and institutional data center environments leveraging industry-standard technologies and best-in-class partnerships.

Sequent was the world's fastest-growing server vendor with systems priced between $100K and $1M in 1997 on the strength of NUMA-Q 2000, and has been the number one vendor of high-end UNIX servers in the UK for the past seven years, according to IDC. Sequent supports more than 10,000 installations worldwide, including many of the world's largest and most sophisticated OLTP, DSS and RDBMS applications.

                      Three Months Ended       Nine Months Ended
                    October 3   October 4   October 3    October4
                      1998         1997        1998         1997
Revenue(a)          $201,398     $207,320    $570,143    $575,347
Net income (loss)(a)$     38     $ 10,298    $(54,692)    $19,603
Net income (loss)  per share - basic $   0.00 $0.26$(1.26)$  0.54
Net income (loss)
 per share - diluted$   0.00     $   0.24    $  (1.26)    $  0.50
(a)  Amounts in Thousands