Irvine-based Printronix Inc. told investors to expect a strong December quarter. The industrial printer maker didn’t disappoint as results trounced Wall Street expectations.
Quarterly net income climbed 55% to $2 million, according to Printronix. Analysts on average expected $768,000.
Printronix makes printers for producing radio frequency identification tags, which are high-tech barcodes used to track shipments. The company also makes line matrix printers for big industry, chiefly automakers. That latter part of Printronix’s business fueled the quarterly gain.
The December quarter saw several large sales close earlier than expected, according to Chief Executive Robert Kleist. One in particular was to an automaker that was replacing all of its nearly decade-old printers, which also happened to be from Printronix.
“It was an order of hundreds of printers beyond what we had planned on,” Kleist said. “A lot of money was spent on (information technology) ahead of Y2K. That’s seven to eight years ago,about the lifespan of equipment. This happened to one customer who waited a really long time to refresh.”
Kleist wouldn’t say who the automaker was other than that it was “a customer we’ve had many years.”
Revenue for the quarter was at the top of the company’s guidance at $34.9 million.
Printronix, with a recent market value of about $85 million, expects a slower pace for the current quarter, with net income ranging from $660,000 to $1.3 million.
“We always have a number of major deals we’re working on,” said Chief Financial Officer George Harwood. “One of the reasons we did so well in the last quarter is one of the deals accelerated. You never know when these are going to work out.”
Also ahead for the company is a shift in its relationship with IBM Corp., which sells Printronix printers along with its own products.
Big Blue recently sold off part of its printer business to Japan’s Ricoh Co. In three years, IBM plans to transfer the rest.
Kleist said he sees no disruptions for Printronix during the transition.
As for the company’s RFID business, there is continued interest among major retailers such as Wal-Mart, which is pushing its vendors to adopt the technology, Kleist said.
“That business remains fairly flat, but the interest is high and more people are coming to the RFID party all the time,” he said.
Gateway’s Profit
It’s been a long struggle for Irvine-based computer maker Gateway Inc. Back in the day, the company’s cowhide-looking boxes were floating everywhere. Gateway’s been in a protracted slump for years now.
Then came their bittersweet earnings announcement: Gateway returned to profitability.
The struggling computer maker reported net income of $8.8 million for the quarter ended December, versus a year-ago loss of $20.9 million. The results were in line with analysts’ estimates. Revenue fell 9% to $1.02 billion, short of an expected $1.05 billion.
There have been some deep cuts as part of the company’s turnaround efforts. More are coming.
Chief Executive Ed Coleman outlined a plan to continue the turnaround, which includes trimming as much as $25 million in expenses. That will be on top of the $30 million to $35 million in cuts announced the previous quarter.
Last go-around, the cuts included nearly 100 jobs. More layoffs are coming, though the company didn’t give an idea of how many.
“It’s apparent we’ve had an unaffordable expense structure,” Coleman said.
Finding a way to run the company more efficiently is his top priority, he said.
“We’ve not stopped looking for further reductions,” Coleman said.
As for sales, Coleman wants the company to focus on consumers. Gateway maintains about 95% brand awareness and has about 14.5% of the consumer market.
Sales to government and business have been slow, but don’t look for that channel to dry up.
“One of the things that’s struck me most since joining Gateway is the enthusiasm in the market and in the press and inside the company when we bring out an industry-leading product,” Coleman said.
He cited a new computer line and 24-inch monitors as examples. But he also sees costs for research and improving industrial design increasing.
And there are opportunities to drive sales with the launch of Microsoft Corp.’s Vista operating system. It’s too early to tell what Vista will mean for Gateway’s sales, but “we’re excited,” Coleman said.
Gateway could use more excitement like that and less like the proxy fight that was narrowly averted late last year.
The company has appointed a new director as part of a deal it struck with investor Firebrand Partners LLC. The second is set to be named this month.
Firebrand, which owns about 11% of Gateway, was disappointed Gateway turned down a buyout offer and had threatened to run its own slate of candidates in a bid to speed a recovery.
Vizio Correction
A Feb. 12 story on flat-panel TV maker Vizio Inc. said it’s growing its worker count following layoffs a few years ago. Turns out we got that wrong. Vizio has kept a pretty small staff as one of the ways to keep overhead down and prices low. But it hasn’t seen any layoffs, according to the company.
