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B R E A K F A S T W I T H T H E F O O L Friday, October 13, 2000 benjamin.rogers@enron.com _________________________________________________________________ REGISTER TO BECOME A FOOL -- GET FREE STUFF! http://www.fool.com/m.asp?i=154055 _________________________________________________________________ Sponsored By: Ameritrade Take the express route to Wall Street. Just $500 opens your cash account. And you'll get a month of commission-free trades. Get on board with Ameritrade. http://www.lnksrv.com/m.asp?i=154056 "The opposite of talking isn't listening. The opposite of talking is waiting." -- Fran Lebowitz GATEWAY BUSTS OUT WITH STRONG Q3 The personal computer maker reported third-quarter earnings after the close yesterday, reaffirming its beyond-the-box strategy. By Mike Trigg Personal computer (PC) maker Gateway (NYSE: GTW) announced earnings in line with Street expectations after the market's close yesterday, citing strong consumer and small business sales and continued growth in Europe. After warnings from stalwart technology firms Intel (Nasdaq: INTC), Dell (Nasdaq: DELL), and Apple (Nasdaq: AAPL) sent PC stocks tumbling in recent weeks, the news was an affirmation of the company's beyond-the-box business strategy. Gateway reported fiscal third-quarter (ended September 30) net income of $152.6 million, or $0.46 per share, compared to $113.2 million, or $0.35 per share, one year ago. A quick look at profits shows this was its third consecutive quarter of 30%-plus net income growth. On the revenue side, the San Diego, Ca. company reported sales of $2.53 billion, an increase of 16% from $2.18 billion in the same period a year ago. As a percentage of sales, gross margins improved one percentage point from the year-ago period to 23.1%. Here, we begin to see the effect of the company's strategy of diversifying its product offering. More than 50% of sales from the quarter came from hardware, software, and services other than the PC. This exceeded company expectations, which called for 45% by the end of the fourth quarter. By gaining traction with its beyond-the-box strategy, the company sets itself up for further margin expansion. Non-PC products and services are high-margin businesses, thus allowing a greater proportion of sales to trickle down to the bottom line. CFO John Todd discussed this subject in the conference call last night, noting the company sees a day when the majority of revenues come from products and services outside the box. Internationally, revenues in the Middle East, Europe, and Africa increased 13%. The company indicated that, without currency difficulties, top-line growth would have seen a 27% year-over-year improvement. Moreover, Gateway's Asia Pacific arm saw an 8% growth in revenue and was adversely affected by problems with suppliers of disk drives, which have since been solved. This quarter was especially good for Gateway. Next quarter is typically its strongest, and the company is comfortable with the consensus estimate calling for 48% profit growth. The consumer segment and software revenue related to the PC will continue to drive growth in coming quarters _________________________________________________________________ NEWS TO GO Internet router provider Juniper Networks (Nasdaq: JNPR) announced fiscal third-quarter net income of $58.2 million, or $0.17 per share, compared to a loss of $1.6 million, or $0.01 per share, year-over-year. The Street consensus called for the company to earn $0.09 per share. Revenue was $201.2 million, a 78% sequential increase. CEO Scott Kriens cited strong demand among service providers to handle the increased amount of Internet traffic. The company directly competes with Cisco (Nasdaq: CSCO) and is gaining serious market traction in the space, which apparently hasn't been affected by the technology slowdown. Data availability software provider Veritas (Nasdaq: VRTS) reported better-than-expected earnings after the market's close yesterday, citing continued international strength, steady revenue, and market share growth in the Windows NT space, and expansion of its Unix business. Veritas' fiscal third-quarter net income excluding adjustments was $70.3 million, or $0.16 per share, compared to $38.9 million, or $0.09 per share, a year ago. The Street consensus called for the company to earn $0.14 per share. CFO Ken Lonchar added in a prepared release that the company continues to see strong growth of its Hewlett-Packard (NYSE: HWP) business. Internet advertising company DoubleClick (Nasdaq: DCLK) announced third-quarter earnings after the close yesterday in line with Street expectations. The company's net income totaled $3.7 million, or $0.03 per share, versus a loss of $3.8 million, or $0.03 per share, in the year-ago period. Revenues were $135.2 million, compared to $75.3 million. Specifically, the media unit reported revenue of $64.3 million, an 86% increase. The number of advertisers fell 10% from the prior quarter. Moreover, it maintained a bearish outlook for the rest of the year, adding that current conditions likely won't change till the second quarter of next year. Communications chip maker PMC-Sierra (Nasdaq: PMCS) reported that fiscal third-quarter profits had tripled, citing strong sales to makers of computer networking gear. The company also forecasted that sales would rise 15% in the next period. Net income excluding onetime items was $56 million, or $0.31 per share, compared to $18.7 million, or $0.11 per share, year-over-year. The Street consensus called for $0.26 per share. Revenue came in at $198.1 million versus the year-ago figure of $82.5 million. The company added a number of acquisitions in order to expand its broadband and communications expertise and serve larger markets this quarter. Purchases include Malleable Technologies, Quantum Effect Devices, and Datum Telegraphic. Check out yesterday's Foolish market wrap-up with just one click. http://www.fool.com/m.asp?i=154057 _________________________________________________________________ EDITOR'S PICK CEO Rick Gilbert tells the Fool how Copper Mountain Networks' products allow telecom service providers to offer broadband Internet access to their customers. http://www.fool.com/m.asp?i=154058 _______________________________________________________________ -News & Commentary http://www.fool.com/m.asp?i=154059 -Fool Community http://www.fool.com/m.asp?i=154060 -Post of the Day http://www.fool.com/m.asp?i=154061 -Latest Fribble http://www.fool.com/m.asp?i=154062 -Latest Market Numbers http://www.fool.com/m.asp?i=154063 ____________________________________________________________ My Portfolio: http://www.fool.com/m.asp?i=154064 My Discussion Boards: http://www.fool.com/m.asp?i=154065 My Fool: http://www.fool.com/m.asp?i=154066 Fool.com Home: http://www.fool.com/m.asp?i=154067 My E-Mail Settings: http://www.fool.com/m.asp?i=154068 Sponsored By: Ameritrade Take the express route to Wall Street. Just $500 opens your cash account. And you'll get a month of commission-free trades. Get on board with Ameritrade. http://www.lnksrv.com/m.asp?i=154069 WIRELESS 201: FREE PREVIEW Get a sneak peek at this report on Soapbox.com http://www.lnksrv.com/m.asp?i=154070 BECOME A FOOL! Get a FREE Investing Guide and more... http://www.fool.com/m.asp?i=154071 FOOL DIRECT E-MAIL SERVICES Need to change your address or unsubscribe? You can also temporarily suspend mail delivery. Click here: http://www.fool.com/community/freemail/freemaillogin.asp?email=benjamin.rogers @enron.com< Have ideas about how we can improve the Fool Direct or new e-mail products you'd like to see? Try our discussion board: http://www.fool.com/m.asp?i=154072 ____________________________________________________ © Copyright 2000, The Motley Fool. All rights reserved. This material is for personal use only. Republication and redissemination, including posting to news groups, is expressly prohibited without the prior written consent of The Motley Fool. MsgId: msg-18462-B10132365Address.msg-09:19:19(10-13-2000) X-Version: mailer-sender-master,v 1.84 X-Version: mailer-sender-daemon,v 1.84 Message-Recipient: benjamin.rogers@enron.com
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