Semiconductor Business Gives Rockwell a Boost
Rockwell International Corp. said Wednesday that its fiscal second-quarter profit rose 12% to $214 million, or 98 cents a share, led by the strong performance of its Newport Beach-based semiconductor business. The company earned $191 million, or 88 cents a share, a year earlier.
Revenue for the period ended March 31 rose 8% to $3.42 billion from $3.16 billion.
Rockwell, which has been slashing its dependence on government and defense contracting, said operating profits in its aerospace and automotive products divisions rose during the quarter while its largest business, factory automation, turned in an 11% dip in earnings. That drop, however, came on the heels of record profits in the preceding year and was expected, said Michael Barnes, Rockwell’s chief financial officer.
He said the automation unit, which makes controls, software and systems for automating factory production processes, is pushing to expand its international business. “That’s a heavy investment that hasn’t yet started providing returns,” Barnes said, adding that Rockwell does expect the automation business to be more profitable in the second half of the year.
While Rockwell is best known as manufacturer of the U.S. space shuttle fleet and the B-1 bomber, the company now is focused on the semiconductor and automation businesses.
Rockwell’s semiconductor unit is the world’s leading modem manufacturer, producing about 80% of the modems that permit fax transmissions between computers, and 65% of the modems enabling computers to send data, graphics and audio files via telephone lines.
High-speed modems are essential for accessing the Internet and the World Wide Web because without the high-speed products accessing the services is a painfully slow process.
The popularity of the Internet helped Rockwell Semiconductor post a 350% increase in operating profit, to $81 million from $18 million, on the strength of a 121% increase in sales, to $407 million from $184 million a year earlier.
For the first half of its fiscal 1996, Rockwell’s total profit rose 14% to $406 million, or $1.87 per share, from $356 million, or $1.64 a share, a year earlier. Sales rose 15% to $6.48 billion from $5.62 billion.
Rockwell is currently negotiating the sale of its graphics systems business, which makes Goss printing presses and reportedly is seeking a buyer for much of its defense and aerospace business as well.
Rockwell’s second quarter ended before the company pleaded guilty last week to three felony charges of mishandling hazardous waste and paid a $6.5 million fine to settle a suit over the deaths of two scientists killed while illegally burning surplus explosives at a rocket engine test facility near Ventura.
