Earnings Soar for Advanced Logic Research
Advanced Logic Research Inc. said Thursday that its earnings rose more than fourfold to $11.5 million for its fiscal year ended Sept. 30, up from $2.8 million a year earlier.
The Irvine personal computer maker’s sales spurted 235% to $171.9 million from $73.1 million last year.
James T. Richardson, chief financial officer, attributed the growth to the company’s competitive pricing policy and introduction of numerous new products during the past year.
“Everyone is concerned about external factors in the economy,” Richardson said. “We haven’t seen any softness in our business.”
For the fourth quarter ended Sept. 30, the company reported earnings of $2.7 million, up 428% from $625,000 a year ago. Sales for the quarter were $50.2 million, up 194% from $25.9 million a year ago.
“We are very happy with our revenue growth for fiscal 1990 and especially our fourth-quarter performance,” said Gene Lu, chairman and chief executive.
About 40% of ALR’s fourth-quarter sales--or more than $20 million--came from lower-priced PCs based on the extended industry standard architecture, Lu said. Although the PC industry is seeing slower growth than in years past, the EISA market is relatively new and still growing at a high rate, Richardson said. EISA, created by a group of computer companies in competition with International Business Machines Corp., is a new standard architecture for the pathway that carries data within a computer.
Rick J. Martin, an analyst at Prudential-Bache Securities in New York, said ALR’s earnings for the last three months were slightly below his estimates. He attributed that to ALR’s heavy discounting of its products, which reduced gross profits--a commonly used gauge of manufacturing efficiency--from an expected 28% to 25%. Martin expects earnings to improve as ALR shifts its emphasis to top-of-the-line products with higher profit margins.
“Yes, we’re in the middle of an economic slowdown,” said Liz Buyer, an analyst at Needham & Co. in New York. “But the PC market is not about to curl up and die. In my opinion, those PC makers that offer aggressively priced computers, such as ALR and AST Research, are going to do well in a downturn.”
Buyer said ALR is being helped by falling prices of components such as chip-sets and memory chips as well as an adequate supply of Intel Corp.’s 80386SX microprocessors, which were in short supply during the summer. Richardson said the company was shifting to higher-priced products based on the Intel 80386DX to avoid the possibility of future shortages of the Intel chip.
In addition, she said, ALR is lowering its costs by manufacturing more of the components for its computer instead of buying them from outside sources.
ALR’S PERFORMANCE In the fourth quarter ended Sept. 30, ALR reported net income of $2.7 million, up 428% from $625,000 a year ago. Revenues rose $194% to $50.2 million. The company attributed the growth to its aggressive pricing strategy and shift to high-end personal computer products.
Figures are in thousands except per share data.
4th Qtr 4th Qtr 12 Months 12 Months 1990 1989 1990 1989 Revenue $50,181 $25,976 $171,994 $73,083 Net income (loss) $2,676 625 $11,506 2,790 Per share (loss) .27 $.09 $1.38 $.41
Source: Advanced Logic Research Inc.
