Comdisco, Inc. Announces Record Third Quarter Earnings From Normal Operations of $58 Million, or $.36 Per Common Share, On Strength of Remarketing and CDO Ventures.Business Editors ROSEMONT Rosemont can have many meanings, including: Places
Engages Investment Bankers Investment Banker A person representing a financial institution that is in the business of raising capital for corporations and municipalities. Notes: An investment banker may not accept deposits or make commercial loans. To Explore Strategic Options for Prism ; and Declares Quarterly Cash Dividend Comdisco (Comdisco, Inc., Rosemont, IL, www.comdisco.com) A technology services company, originally founded as Computer Discount Company in 1969 by Ken Pontikes. By the mid-1990s, Comdisco had become one of the largest independent computer and electronics equipment leasing companies as well as a , Inc. today reported operating results for its third quarter ended June June: see month. 30, 2000. Operating Results: For the third quarter, Comdisco reported earnings from normal operations Generally and collectively, the broad functions that a combatant commander undertakes when assigned responsibility for a given geographic or functional area. Except as otherwise qualified in certain unified command plan paragraphs that relate to particular commands, "normal operations" of , which excludes the operational losses from Prism Communication Services, Inc., of $58 million, or $.36 per common share, compared to $43 million or $.26 per common share, for the prior year period. Including the operational losses from Prism, net earnings for the third quarter were $17 million, or $.10 per common share, compared to $36 million, or $.22 per common share, for the prior year period. Total revenue for the third quarter was $953 million, compared with $1.3 billion, for the prior year period. The prior year period includes $503 million of revenue from the sale of non-strategic assets during the quarter. For the nine months ended June 30, 2000, the company reported earnings from normal operations, of $186 million, or $1.14 per common share, compared to $123 million, or $.76 per common share, in the prior year period. Including the operational losses from Prism, net earnings were $101 million, or $.62 per common share, compared to $18 million, or $.11 per common share for the prior year period. Net earnings for the prior year period also includes a $150 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta charge related to the divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). of low-margin businesses and the realignment re·a·lign tr.v. re·a·ligned, re·a·lign·ing, re·a·ligns 1. To put back into proper order or alignment. 2. To make new groupings of or working arrangements between. of the company's service businesses. Total revenue for the nine months was $2.8 billion, compared with $3.2 billion, for the prior year period. The prior year period includes $503 million of revenue from the sale of non-strategic assets. CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Commentary: Commenting on third quarter results, Nick Pontikes, President and Chief Executive Officer, stated, "Another strong performance from both our leasing business and Comdisco Ventures contributed to our best ever third quarter earnings from normal operations. "Although we experienced upward revenue growth in our technology services business -- a record $173 million, up 30% -- we also continue to make investments for future growth in both our Network Services and Web Services (1) Loosely, any online service delivered over the Web. Such usage appears in articles from non-technical sources, but not in IT-oriented publications, because definition #2 below describes the correct use of the term. businesses. As a result of these investments, our technology services pre-tax earnings were down for the third quarter compared to both the year earlier quarter and the second quarter of fiscal 2000. We expect these investments to continue in the short term as we position ourselves for the future." Continued Pontikes, "Earnings contributions from remarketing were at near record levels in the current quarter from both our information technology portfolio and our electronics portfolio. Comdisco Ventures had another strong quarter, with pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern earnings of $54 million, compared to $22 million in the year earlier quarter. Recent strength in the public markets contributed to the quarter and positioned Comdisco Ventures for a strong fourth quarter of fiscal 2000. At June 30, 2000, on a mark-to-market Mark-to-market Adjustment of the book value or collateral value of a security to reflect current market value. basis, Comdisco Ventures had a value of $484 million of publicly traded securities within Comdisco Ventures portfolio. This compares to $530 million at March 31, 2000, and $194 million at September September: see month. 30, 1999." Concluded Pontikes, "We continue to improve the strategic position of our businesses through investment in new products and improved operating efficiencies. As we build upon our global brand initiatives we remain committed to deliver the promise of technology to our customers worldwide." Prism Communication Services, Inc.: Comdisco announced today that it has engaged investment bankers to assist it in a review of strategic alternatives for Prism. The company cautioned, however, that the process is in an early stage and that the company has not entered into any agreements or commitments concerning any such alternatives. The company said it does not intend to comment further regarding these matters unless and until it determines to proceed with a particular transaction. On July July: see month. 24, 2000 Prism announced the availability of RED Voice(TM) for single-line users and RED Voice for Business(SM), a multi-line voice service for small and medium-sized businesses (SMB (1) (Small to Medium-sized Business) Also called "SME" (small to medium-sized enterprise), it refers to companies that are larger than the small office/home office (SOHO), but not huge. ) in ten markets. Prism now provides bundled digital subscriber line See DSL. (communications, protocol) Digital Subscriber Line - (DSL, or Digital Subscriber Loop, xDSL - see below) A family of digital telecommunications protocols designed to allow high speed data communication over the existing copper telephone lines between end-users and (DSL DSL in full Digital Subscriber Line Broadband digital communications connection that operates over standard copper telephone wires. It requires a DSL modem, which splits transmissions into two frequency bands: the lower frequencies for voice (ordinary ) and carrier-grade voice simultaneously, expanding on its suite of communications services. Dividend Information: On July 25, 2000, the Board of Directors declared a quarterly cash dividend of $.025 per share to common stockholders. The common stock cash dividend will be payable on September 11, 2000, to stockholders of record on August 11, 2000. Comdisco had 152,178,205 shares of common stock outstanding at June 30, 2000. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. : The foregoing contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. regarding Comdisco, which are based on current expectations and assumptions, and which involve risks and uncertainties that could cause results to differ. The company intends that such forward-looking statements be subject to the safe harbor created by Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. The following lists some of the factors, which could cause results to differ from expectations. As a result of the evolving nature of its services business, the company has limited meaningful historical data in which to base its planned operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. . A significant portion of the company's expense levels are based in part on its expectations as to future services revenues, and, to a large extent, are fixed. To attain its services earnings contribution goals for fiscal 2000, the company will have to meet its obligations under the agreements underlying its sales backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. . Also, the company must expand its contract subscription base (through new contract signings and contract renewals), increase its revenues through other technology services, primarily managed network services, web availability services, and IT CAP Solutions, and contain costs. The company's ability to obtain new business and realize revenue on its sales backlog depends on its ability to anticipate technological changes, develop services to meet customer requirements on a global basis and achieve delivery of services that meet customer requirements on a domestic and global basis. In addition, with respect to new business opportunities, the company must successfully compete with organizations offering similar services. Securities held by Comdisco Ventures are generally subject to lockups restricting its ability to sell until several months after an initial public offering. The public market for high technology and other emerging growth companies is extremely volatile. Such volatility may adversely affect the ability of the company to dispose of To determine the fate of; to exercise the power of control over; to fix the condition, application, employment, etc. of; to direct or assign for a use. See also: Dispose the securities held by Comdisco Ventures and the value of those securities on the date of sale. Prism is a start up company that has incurred operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. since inception and the company expects that Prism's operating losses will continue to increase as it constructs its communications network The transmission channels interconnecting all client and server stations as well as all supporting hardware and software. . There can be no assurance that in the future Prism will be profitable on a quarterly or annual basis. In addition, Prism will require substantial additional capital to support its data network, to expand its services, to increase its sales and marketing efforts and to support its growth. Prism operates in a highly regulated environment and changes in regulatory policy could adversely impact Prism. Additional factors that would cause results to differ are discussed in the company's Form 10-Q Form 10-Q See 10-Q. for the quarter ended March 31, 2000. The company undertakes no obligation to publicly update or revise any forward-looking statement whether as a result of new information, future events or otherwise. About Comdisco: Comdisco (www.comdisco.com) provides global technology services to help its customers maximize technology functionality, predictability and availability, while freeing them from the complexity of managing their technology. The Rosemont, (IL) company offers a complete suite of information technology services including business continuity, Web-Availability(SM), network, and IT Control and Predictability Solutions(SM). Through its subsidiary, Prism Communication Services Inc., Comdisco is developing a high-speed, always-on digital network, which will provide customers with leading-edge connectivity. Comdisco also offers equipment services to key vertical industries, including electronics, communications, laboratory & scientific, and manufacturing solutions. Through its Comdisco Ventures group, Comdisco provides equipment leasing Equipment Leasing is a financing option to lease equipment for a certain amount of time. Leasing Benefits
A new business. . The company's revenue for the 12 months ended June 30, 2000 was $3.8 billion. Comdisco is a registered trademark of Comdisco, Inc.
Comdisco, Inc.
Revenue and Earnings Breakdown
By Lines of Business
Below are the results by lines of business for the three and nine
months ended June 30, 2000 and 1999 (dollars in millions):
Three months ended Nine months ended
6/30/00 6/30/99 6/30/00 6/30/99
------- ------- ------- -------
Revenue
Leasing $ 629 $ 606 $1,913 $2,158
Services 173 133 476 376
Ventures 150 60 451 138
------ ------- ------ ------
Normal Operations 952 799 2,840 2,672
Mainframe and medical sale (1) - 503 - 503
Prism 1 - 3 -
------- --------- --------- --------
Total $ 953 $1,302 $2,843 $3,175
====== ====== ====== ========
Pretax Earnings
Leasing $ 24 $ 24 $ 60 $ 87
Services 12 21 52 59
Ventures 54 22 178 46
------ ------- ------ -----
Normal Operations 90 67 290 192
Charge (2) - - - (150)
Prism (64) (11) (133) (14)
------- ------ ------- -------
Total $ 26 $ 56 $ 157 $ 28
======= ======= ======= ========
Earnings Per Share
Normal Operations $0.36 $0.26 $1.14 $0.76
Charge (2) - - - (0.59)
Prism (0.26) (0.04) (0.52) (0.06)
------- ------ ------- -------
Diluted EPS $ 0.10 $ 0.22 $ 0.62 $ 0.11
======= ======= ======= =======
(1) The sale of the mainframe portfolio and the sale of the
medical refurbishing business were both concluded in the
fiscal quarter ended June 30, 1999.
(2) In the second quarter of fiscal 1999, the company recorded a
pre-tax charge of $150 million ($96 million after-tax, or $.59
per common share) related to the divestiture of low-margin
businesses and the realignment of the company's service
businesses.
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