Profitability eluded Cyrix once again as the microprocessor manufacturer posted a net loss for the third quarter, missing analysts' expectations for a profit.
Cyrix reported a loss of $700,000, or 4 cents a share, for the third quarter, compared with a loss of $6.9 million, or 36 cents a share, a year ago. Analysts had predicted a profit of 3 cents a share, according to First Call
The loss was due partially to inventory sales of the company's 6X86 processors. The older processors, which made up half of Cyrix's unit sales, essentially were sold for cost, said acting chief executive officer Jay Swent. As a result, overall gross margins dropped from 30 percent to 24 percent.
Despite the loss, Cyrix was quick to point out that it hit a number of its goals in its last quarter as an independent company.
The company achieved record revenues of $93.2 million during the quarter, up 182 percent from $33.1 million for the same quarter the year before. Cyrix also shipped 1.3 million processors overall, and doubled the number of Media GX processors it shipped during the quarter to 400,000.
Further, the fire sale on the 6x86 non-MMX chips eliminated most of the inventories of that chip, thereby removing a potential cloud hanging over the fourth quarter.
"We met the majority of our goals despite competitive pressures," said Swent.
The fourth quarter shows great promise, he added, as the sub-$1,000 market continues to grow. The Media GX is targeted to that market. Cyrix will be a division of National Semiconductor at that time.
"The fourth quarter is shaping up well," Swent said. "We see a tremendous opportunity for that market."
Profitability largely has been elusive for the company during the past five quarters, with the exception of a profit of $6.6 million reported in the first quarter. Nevertheless, Cyrix has posted year-over-year sequential revenue growth for the past four quarters.
To turn around its profit picture, Cyrix, along with future parent company National Semiconductor, has embarked upon a strategy to provide integrated processors for sub-$500 computers and other low-cost devices. Although not as profitable as processors for high-end machines, a large market for low-cost processors exists, say various observers. The company's early dedication to that market could pay off in the long run.
Cyrix's stock recently hit a 52-week high of 35 a share last Friday, and has been climbing fairly steadily since July, when it traded around 20 a share.
Despite the financial outlook, Cyrix has enjoyed a relatively successful quarter as far as products are concerned. The company landed a design win with IBM, and its Media GX processor is now found in one of IBM's Aptiva models. Similar agreements were struck, albeit more quietly, with Tatung and First International Computer, sources said.