Token Ring specialist Olicom has blamed stiff price competition and internal restructuring for its $29.9 million net loss in its fourth fiscal quarter.
Suppliers of Token Ring, including Olicom, IBM and Madge Networks, are seeing their markets being eroded by Ethernet technology which is easier to install and maintain. Olicom is shifting its development towards Ethernet and Fast Ethernet in particular.
As part of this, Copenhagen based Olicom this week signed an OEM deal with switch supplier which involves the two companies swapping switches. Cabletron will market Olicom?s range of Token Ring switches while Olicom will rebadge Cabletron's Smart Switch Router 8000 family.
During the three months ended 31 December 1998, Olicom reported a net loss of $23.4 million excluding one-time charges, compared to a $6.7 million net loss last year. For the full year, Olicom reported a net loss of $22.9 million, worse than 1997?s net loss of $18.1 million.
Revenue for the quarter fell 63 per cent to $23.1 million, while full year revenue dropped two per cent to $206.8 million. The loss per share in the quarter was $1.68 on 17.9 million shares outstanding, compared with a gain of 35 cents per share for the fourth quarter of 1997 on 18.8 million shares outstanding.
Olicom chiefs are cautious about the company?s near term outlook. For fiscal 1999 the company is targeting revenue growth of 15 per cent and full year earnings per share of around 40 cents.
Niels Christian Furu, Olicom chief executive, said in a statement: ?The results for the fourth quarter were primarily a consequence of our decision, announced 30 November, to effect a major restructuring of business. We decided to bring inventory in the channel into line with approproate levels, which historically has corresponded to six and seven weeks of estimated user demand.?
Also as part of its cost cutting measures, Olicom last month divested its 75 per cent holding in PC modem developer, Lasat.
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