Diamond Multimedia Reports Results for the Third Quarter Ended September 30, 1998.SAN JOSE San Jose, city, United States San Jose (sănəzā`, săn hōzā`), city (1990 pop. 782,248), seat of Santa Clara co., W central Calif.; founded 1777, inc. 1850. , Calif.--(BUSINESS WIRE)--Oct. 8, 1998--Diamond Multimedia Systems, Inc. (Nasdaq:DIMD DIMD Dorland's Illustrated Medical Dictionary ), a leader in the interactive multimedia market, today reported financial results for the third quarter ended September September: see month. 30, 1998. For the quarter, net revenues were $123.2 million, up 34% from $92.0 million for the third quarter of 1997. The company incurred a net loss for the third quarter of $22.2 million, or $0.63 per share, compared to a net loss of $2.5 million, or $0.07 per share in the third quarter of last year. For the nine months, net revenues were $481.7 million, up 87% from $257.4 million for the first three quarters of 1997. Net loss year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. was $22.6 million, or $0.65 per share, compared to a net loss of $52.6 million, or $1.54 per share for the first three quarters of 1997. "Given the supply-demand and pricing dislocations evident during the past six months in the PC and PC semiconductor industries, we decided we needed to move toward a faster "short-cycle" inventory model," said William J. Schroeder William J. Schroeder was one of the first recipients of an artificial heart. On November 25, 1984, Schroeder became the second human recipient of the Jarvik 7. After 18 days, he suffered the first of a series of strokes, eventually leaving him in a vegetative state. , president and chief executive officer. "We took the step of virtually stopping all inventory buys and new production during the first half of our third quarter. This had the beneficial effect of allowing us to cut our inventory by almost half, and to bring most of our channel inventory in line with the targets contemplated by our new short-cycle model. We believe the balance of our channel inventory will come into line during our typically strong fourth quarter." "While we strongly believe that this was the right step to take in light of the increasingly deflationary de·fla·tion n. 1. The act of deflating or the condition of being deflated. 2. A persistent decrease in the level of consumer prices or a persistent increase in the purchasing power of money because of a reduction in available nature of the PC market, the action we took necessarily resulted in the majority of our third quarter revenue being shipped in September. In the end, our operations staff simply did not have enough time to produce and ship against all the orders that our customers had booked in September, and, as a result, our third quarter revenue did not meet our expectations," said Schroeder Schroeder his only wish is to play Beethoven’s music on his piano. [Comics: “Peanuts” in Horn, 542–543] See : Music Schroeder compulsively plays the works of Beethoven on his toy piano. . "Our lower revenue level in the third quarter contributed to our low gross margin," said James James, person in the Bible James, in the Gospel of St. Luke, kinsman of St. Jude. The original does not specify the relationship. James, rivers, United States James. M. Walker, senior vice president and chief financial officer, " but the lower margin also reflects three other issues: (i) Inventory consumption in large part consisted of higher-cost components purchased in the first half of the year before the major semiconductor price declines; (ii) substantial pricing pressure on our legacy graphics products, almost all of which have now been sold; and (iii) price protection charges related to our Monster 3D II product, whose supply along with that of other Voodoo 2 based graphics subsystems exceeded demand during the third quarter." "On the positive side, our outstanding orders at the end of the third quarter were roughly triple our orders at the beginning of the quarter, and our order rate and shipping momentum are strong. Moreover, we believe our current product line up, including products planned for launch during October October: see month. , is the strongest we have ever had. This includes HomeFree, our wireless home networking product, and Rio See RapidIO and MP3. , our Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the music player, two new products aimed at exciting new emerging market segments. Several of our new products reflect our strategic objective of shifting our revenue base toward more differentiated, proprietary products targeted at what believe will be hot new growth markets that leverage our brand and channels," Schroeder said. "Other accomplishments during the third quarter included the successful launch of the Viper 550, based on the Nvidia Riva TNT The RIVA TNT, codenamed NV4, is a 2D, video, and 3D graphics accelerator chip for PCs that was manufactured by NVIDIA. It was released in late 1998 and cemented NVIDIA's reputation as a worthy rival within the developing consumer 3D graphics adapter industry. chip, which the company believes is the highest performance mainstream graphics accelerator A display adapter that performs a specialized set of graphics functions to render an image on screen. Today, all display adapters provide basic rendering functions in hardware, but many have graphics processing units (GPUs) that are sophisticated computers. currently shipping and which has won early editorial accolades. We completed the acquisition and integration of Micronics and Digital Cast, an internet appliance Also called "information appliance," "smart appliance," and "Web appliance," it is a device specialized for accessing the Web and/or e-mail. Designed for ease of use, it plugs into a telephone jack or LAN connection for Internet hookup. design firm. And, we made a strategic investment in Nvidia. The three investments totaled approximately $37 million in cash. Finally, we completed the conversion at quarter end of the company's IT systems to an integrated database, enterprise-wide resource planning Resource planning may refer to:
"Looking forward, we believe we are positioned with current, low-cost inventory, a strong product line populated pop·u·late tr.v. pop·u·lat·ed, pop·u·lat·ing, pop·u·lates 1. To supply with inhabitants, as by colonization; people. 2. with higher margin, proprietary products and strong brand and market momentum. Understandably, we are optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about our ability to come back strongly in our fourth quarter and to maintain this momentum going forward into 1999," Schroeder said. About Diamond Multimedia Diamond Multimedia is driving the interactive multimedia market by providing advanced solutions for home, business and professional desktop computer users, enabling them to create, access and experience compelling new media content from their desktops and through the Internet. Diamond accelerates multimedia from the Internet to the user with products that include the Stealth stealth Any military technology intended to make vehicles or missiles nearly invisible to enemy radar or other electronic detection. Research in antidetection technology began soon after radar was invented. and Viper(R) series of media accelerators, the Monster series of entertainment 3D and sound accelerators, the Fire series of professional 3D accelerators, the Micronics series of system boards, the Supra A relational DBMS from Cincom Systems, Inc., Cincinnati, OH (www.cincom.com) that runs on IBM mainframes and VAXs. It includes a query language and a program that automates the database design process. (R) series of modems, and the HomeFree line of home networking products. Diamond's common stock is traded on the Nasdaq Stock Market Nasdaq stock market The first electronic stock market listing over 5000 companies. The Nasdaq stock market comprises two separate markets, namely the Nasdaq National Market, which trades large, active securities and the Nasdaq Smallcap Market that trades emerging growth companies. under the symbol DIMD, and its web site address is www.diamondmm.com. The above statements concerning future results, and in particular the statements regarding order and shipping momentum, revenues from new product launches, low cost of inventory, higher margins and new product segments, constitute 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. as that term is defined in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Such forward-looking statements are subject to a number of risks and uncertainties, which could cause actual results to differ materially from those projected. Among the factors that could cause actual results to differ materially are the following: business conditions and growth in the graphics and multimedia accelerator accelerator: see particle accelerator. (1) A key combination such as Alt-G or Ctrl-Shift H that is used to activate a task. (2) An incubator that expects to develop the company considerably faster than normal. See incubator. market, the modem market and the general economy, the volume and timing of orders received during the period, the timing of new product introductions by the Company and its competitors, product line maturation maturation /mat·u·ra·tion/ (mach-u-ra´shun) 1. the process of becoming mature. 2. attainment of emotional and intellectual maturity. 3. , competitive factors, such as rival chipset A group of chips designed to work as a unit to perform a function. For example, a modem chipset contains all the primary circuits for transmitting and receiving. A PC chipset provides the electronic interfaces between all subsystems (see PC chipset for illustration). designs and pricing pressures, the availability of third-party components products at reasonable prices, inventory risks due to shifts in market demand and/or price erosion of purchased components, changes in product mix, distribution channels, and costs associated with the development, manufacture and market introduction of new products. Additional risks are detailed in the Company's filings with the Securities and Exchange Commission, including its reports on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. filed on March 24,1998 and the most recent 10-Q filed on August 14, 1998. The Company may, from time to time, make additional written and oral forward-looking statements, including statements contained in the Company's filings with the Securities and Exchange Commission and its reports to shareholders. The Company does not undertake to update any forward-looking statement that may be made from time to time by or on behalf of the Company. Readers should carefully review the risk factors described in the documents the Company files from time to time with the Securities and Exchange Commission. -0-
Diamond Multimedia Systems, Inc.
Consolidated Condensed Balance Sheets
(unaudited; in thousands)
September 30, 1998 December 31, 1997
----------------------- -----------------------
ASSETS:
Current Assets:
Cash and short-term
investments $77,719 $90,065
Accounts
receivable, net 81,926 98,777
Inventories, net 52,145 78,647
Prepaid expenses and
other current assets 14,256 6,350
Income taxes receivable 6,342 24,929
Deferred taxes 24,596 14,679
----------------------- -----------------------
Total Current Assets 256,984 313,447
Property, Plant and
Equipment, net 26,783 15,216
Other assets 28,110 3,616
Goodwill and other
intangibles, net 4,543 5,275
======================= =======================
TOTAL ASSETS $316,420 $337,554
======================= =======================
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Current portion
of long-term debt $48,031 $36,455
Trade accounts payable
and other accrued
liabilities 103,759 116,431
Income taxes payable 197 2,274
----------------------- -----------------------
Total current
liabilities 151,987 155,160
Long-term debt, net
of current portion 1,605 1,873
----------------------- -----------------------
Total liabilities 153,592 157,033
Stockholders' equity 162,828 180,521
====================== =======================
TOTAL LIABILITIES AND
STOCKHOLDERS'
EQUITY $316,420 $337,554
====================== =======================
Diamond Multimedia Systems, Inc.
Consolidated Statement of Operations
(unaudited; in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30 September 30
1998 1997 1998 1997
----------------------- -----------------------
Net sales $123,200 $92,028 $481,743 $257,413
Cost of sales 122,817 73,850 419,271 242,767
Gross profit 383 18,178 62,472 14,646
Research & development 8,135 5,899 22,395 18,121
Selling, general and
administrative 23,231 16,474 70,136 61,557
Amortization of
intangibles 244 172 732 2,831
Write-off of intangibles -- -- -- 9,938
Restructuring expenses -- -- 1,384 --
Total operating
expenses 31,610 22,545 94,646 92,447
Loss from operations (31,227) (4,367) (32,175) (77,801)
Interest income
(expense), net (12) 388 481 1,426
Other income
(expense), net (402) 50 (457) 783
Loss before provision
(benefit) for
income taxes (31,641) (3,929) (32,151) (75,592)
Provision (benefit)
for income taxes (9,465) (1,376) (9,618) (22,979)
Net Loss ($22,176) ($2,553) ($22,533) ($52,613)
Shares used in per
share calculation:
Basic 34,990 34,389 34,863 34,274
Diluted 34,990 34,389 34,863 34,274
Net loss per share:
Basic (0.63) (0.07) (0.65) (1.54)
Diluted (0.63) (0.07) (0.65) (1.54)
|
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion