The company's large customer that you refer to is Intel. The recent drop in the stock's price was in a large part due to a sudden cutback in orders from Intel. The current trend toward under $1,000 PCs has hurt Intel in the short term because they mostly supply chips for more expensive computers. I have seen articles lately that speculate that the trend toward less expensive computers may have peaked. At any rate, AATT has stated in their press releases that they are pursuing the makers of under $1,000 PCs. |
CONCORD, N.H.--(BUSINESS WIRE)--July 21, 1998--
Aavid Chairman and CEO Ronald F. Borelli said, ''I am extremely pleased with Aavid's strong performance which outpaced the industry in the second quarter. This was achieved during difficult market conditions that adversely affected many of our customers. The quality and productivity initiatives that we have been putting in place contributed to the company's strong showing and we received better than expected revenues from our largest customer which offset some of the soft demand being experienced in the semiconductor industry overall.
''We experienced increased revenues from our largest customer in the second quarter, but the most recent forecasts which we just received indicate that third quarter shipments will be lower, due to changing product mix and demand,'' Borelli stated.
Borelli continued, ''While Aavid is well positioned to continue to play an important role in supplying our largest customer with new products, this sudden change in demand will most likely lead to a sequential decline in revenues in the current quarter for Aavid. Our Fluent and Applied subsidiaries should continue to deliver results in line with expectations. Overall, based on current market conditions and customer forecasts, we expect to see an interruption to our long-term growth trend in the third and to a lesser extent, the fourth quarter.
''The increased market share and price pressures of the sub-$1000 personal computer have shifted the point of purchase for many thermal solutions directly to computer manufacturers. However, as the personal computer market recovers, Aavid is well positioned to take advantage of the shift of thermal management to computer manufacturers and capture this business. Aavid made major penetration into the top eight global personal computer manufacturers during the second quarter, which will support this effort.