XIRCOM BOSS LOOKS FOR PROFITABLE 1998; GATES EXPECTS 40 PERCENT REVENUE GAIN.Byline: David Zielenziger Bloomberg News Xircom Inc. will turn in a profitable fiscal 1998, rebounding from last year's $9.9 million loss, on better management and as its partnership with Intel Corp. starts shipping its first products, said founder and Chairman Dirk Gates. Xircom, which derives more than 80 percent of its revenue from credit-card-size modems and adapters that link notebook personal computers to networks or mobile telephones, overcame distribution and cost barriers that ruined its fiscal year ended Sept. 30, Gates said. ``The market looks strong. The products look strong. We're in much better shape than we were a year ago,'' he said last week. The Thousand Oaks-based company he founded in 1988 expects revenue to rise about 40 percent to $260 million.``There'll be a full year of profit for fiscal 1998.'' He wouldn't provide earnings estimates, but the company is expected to earn 64 cents a share, the average estimate of seven analysts carried by IBES IBES See: Institutional Brokers Estimate System International. For the year ended Sept. 30, Xircom reported a net loss of $9.85 million, or 46 cents, compared with net income of $5.95 million, or 30 cents, in fiscal 1996. Late last month, the company reported that first-quarter net income fell by almost half to $2.43 million, or 11 cents per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, from $4.46 million, or 22 cents, a year ago. Revenue slipped almost 7 percent to $52.5 million. Gates, a 36-year-old Cal State Northridge graduate, has a 5 percent stake in Xircom that has lost about 60 percent of its value, or about $19 million, during the past 12 months. ``I stand to gain a lot or lose a lot,'' Gates said. ``I followed the roller roller, common name for brightly colored Old World birds noted for performing somersaults in flight. They include the rollers proper (subfamily Coraciinae) and ground rollers (subfamily Brachypteraciinae coaster What a bad CD-R disc is often called. See CD-R and underrun. of Xircom's financial history.'' Gates said he's pleased by the results for the period ended Dec. 31 because revenue more than doubled from the fourth quarter. That pace will continue, he predicted, because Xircom now has only about a 30-day inventory, compared with about 45 days in September and more a year ago. Former rivals, including Toshiba Corp. and Digital Equipment Corp., signed agreements this month to install Xircom modems in their advanced notebook PCs. Previously, other computer makers like International Business Machines Corp. and Hewlett-Packard Co. signed similar agreements, which now account for about 10 percent of revenue. Those alliances didn't exist a year ago. In January 1997, Intel acquired a 12.5 percent equity stake in the company for $52.5 million, as well as an option to boost that to 20 percent. ``Our relationship is beautiful,'' Gates said. ``They are one of our biggest original equipment manufacturer sellers.'' By late this year, Xircom will ship its first jointly developed PC card, which will combine the company's local-area network technology with Intel's mobile telephone technology. Xircom already sells adapter cards See adapter and expansion board. that connect a notebook PC to cellular phones that adhere to adhere to verb 1. follow, keep, maintain, respect, observe, be true, fulfil, obey, heed, keep to, abide by, be loyal, mind, be constant, be faithful 2. either U.S. or international standards. These $129 connection kits work with selected models from L.M. Ericsson Telephone Co. and Nokia AB, two of the biggest cellular phone makers. ``If you're going to give someone a notebook PC, you want to make sure they stay connected,'' Gates said. That increases the appeal to companies that order thousands of products for a work force. Meanwhile, Gates said Xircom expects the year-old dispute between rival makers of 56-kilobit modems will be settled next month, that universal products will be available starting in March and that the International Telecommunications Union See ITU. (body, standard) International Telecommunications Union - (ITU) ITU-T, the telecommunication standardisation sector of ITU, is responsible for making technical recommendations about telephone and data (including fax) communications systems for PTTs and suppliers. will endorse To sign a paper or document, thereby making it possible for the rights represented therein to pass to another individual. Also spelled indorse. endorse (indorse) v. the standard by September. Xircom has been selling 56-kilobit modems using chips from Lucent Technologies Inc. and Rockwell International Rockwell International was the ultimate incarnation of a series of companies under the sphere of influence of Willard Rockwell, who had made his fortune after the invention and successful launch of a new bearing system for truck axles in 1919. Corp., which differ slightly from those made by Texas Instruments See TI. (company) Texas Instruments - (TI) A US electronics company. A TI engineer, Jack Kilby invented the integrated circuit in 1958. Three TI employees left the company in 1982 to start Compaq. Inc. To date, the company has seen mixed results from the downturn in the Asian economies. While sales in the region, formerly the fastest-growing for new accounts, are relatively flat, Xircom has benefited from sharply lower prices for semiconductors and electronics bought for its factory in Malaysia. ``There've been some cost savings. We did improve our gross margins in the first quarter,'' Gates said. ``We saved on the costs of goods'' because of lower Asian currencies. CAPTION(S): Photo, Chart Photo: (Color) Xircom founder and Chairman Dirk Gates, at work in his Thousand Oaks Thousand Oaks, residential city (1990 pop. 104,352), Ventura co., S Calif., in a farm area; inc. 1964. Avocados, citrus, vegetables, strawberries, and nursery products are grown. office, says, ``There'll be a full year of profit for fiscal 1998.'' Michael Owen
Chart: (Color) VOLATILE YEAR Shares of Xircom Inc. have lost approximately 56 percent of their value since January 1997. SOURCE: Bloomberg News Daily News |
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