Computer Industry Soars Out Of World Recession

The Age

Tuesday January 24, 1995

Thom Cookes

AMONG the companies to release their financial results during January, there has been a generally upbeat note - even the beleagured Digital Equipment Corporation has clawed its way back to profitability.

Apple has reported record revenues and earnings in the first quarter, ending December 30, 1994. The company also announced that it had shipped its one millionth Power Macintosh computer or upgrade based on the PowerPC microprocessor.

Apple says its revenue in the first quarter of 1995 was $US2.83 billion, a rise of 15 per cent on the first quarter of the 1994 financial year. Apple says the first quarter of this year has given the highest quarterly revenue figure in the company's 17-year history.

Net income for the quarter was $US188 million, or $US1.55 per share compared with $US40 million for the same quarter in the previous year. The company disclosed the current quarter's results include an adjustment that increased income by $US17 million related to a reduction in the estimate of costs associated with certain restructuring activities that began in fiscal 1993.

Hewlett-Packard says that revenue for its application development products grew in 1994 by 47 percent over 1993 figures, more than double that of industry expectations for overall market growth in Unix-based application development.

Gretchen Tobin, portfolio marketing manager for HP's Software Engineering Division, attributed the 47 percent growth rate to the combined effects of new product releases - such as the Cross Platform Toolset for HP's UIM/X graphical user interface (GUI) builder - and HP's ``tuning" of existing products like the SoftBench environment for C, C++, and Cobol.

She declined to break down the figure to products but said the growth rate covered all three of HP's development families: SoftBench; UIM/X; and HP's object-oriented Distributed Smalltalk environment.

HP's growth rate for 1994 is more than double the overall industry rate projected by International Data Corporation in its 1993 Unix CASE (computer-aided software environment) Software Market report, said Tobin. In the report, IDC projected growth for the Unix CASE software market at a compound annual growth rate of 22.9 per cent through 1997, she said.

Chipmaker, Cyrix Corporation, celebrated a record fiscal 1994 by announcing that its competitor to Intel Corp's Pentium microprocessor had exceeded early performance expectations, and samples would be available next month.

The company reported record sales of $US246 million for 1994, nearly doubling the 1993 results with a 97 percent increase. Net income at $US37.6 million for 1994 increased by 92 per cent over last year.

The company said it almost quadrupled the volume of 486DX/66 chip shipments in the fourth quarter over the previous period. Cyrix started producing DX2 80 MHz chips this month and said if yields continued improving it would be able to meet more of the demand for the chip this quarter.

Microsoft reported net income of $US373 million on revenues of $US1.48 billion for the second quarter of 1994, representing a 29 per cent increase in net income and a 31 per cent jump in revenues.

While revenues were up, so were operating costs. Microsoft reported operating expenses of $US740 million, up from $US529 million last year. It attributed the increase to higher sales and marketing costs.

Microsoft launched a $US100 million advertising campaign in late 1994 which it said was designed to improve brand recognition. The company reported spending $US199 million for research and development during the final three months of 1994, a $US49 million increase over the same period last year.

Digital Equipment Corporation has moved out of the red ink, reporting net income of $US18.9 million.

In the quarter, ended 31 December, DEC had operating revenues of $US3.473 billion, up from $US3.254 billion in the second quarter of last year. The net income compared to a net loss of $US72.1 million in last year's second quarter.

Robert Palmer, president and chief executive of Digital, said in a teleconference last Wednesday that with the second-quarter profit, ``... we have reached one of our most aggressive interim goals" - to achieve an operating profit by the end of calendar 1994.

Despite its second-quarter profit, the company lost $US111.69 million in the first six months of 1995. DEC officials refused to predict an overall profit in the 1995 financial year. However, Palmer reiterated that DEC was aiming for sustained operating profit by the end of this financial year, and said he saw nothing in the latest results to suggest this goal could not be met.

The brightest spots in product-line terms appear to be Digital's Alpha reduced instruction-set computing (RISC) systems and its recently rejuvenated personal computer line. Vincent Mullarkey, DEC's vice- president and chief financial officer, said during the teleconference that the personal computer business grew 100 percent over 1993. He also noted that much of the growth in DEC's Alpha business was coming from new customer accounts.