Xircom Expects Moves Will Regain Profitability

Xircom Inc. hopes it will turn profitable in fiscal 1998, rebounding from last year’s $9.9-million loss, due to better management and its partnership with Intel Corp., Chairman Dirk Gates said.

Xircom, which derives more than 80% of its revenue from credit-card-sized modems and adapters that link notebook computers to networks or mobile telephones, overcame distribution and cost barriers that ruined its fiscal year ended Sept. 30, Gates said.

The Thousand Oaks-based company expects revenue to rise 40% to about $260 million. 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.

In its most recent quarter, the company reported that net income fell by almost half to $2.43 million, or 11 cents a diluted share, from $4.46 million, or 22 cents, a year ago. Revenue slipped almost 7% to $52.5 million.

Gates said he is 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. Former rivals, including Toshiba Corp. and Digital Equipment Corp., signed agreements this month to install Xircom modems in their advanced notebook PCs.

IBM Corp. and Hewlett-Packard Co. signed similar agreements in the past year.

Last January, Intel acquired a 12.5% equity stake in the company for $52.5 million, with an option to boost that to 20%. By late this year, Xircom will ship its first jointly developed PC card, combining the company’s local-area network technology with Intel’s mobile telephone technology.