Cyrix shrinks losses, misses mark
The chip maker reports smaller losses compared to last year but misses expectations for the June quarter as demand falls for older chips.
The supplier of processors to the PC industry today reported a net loss of $5.3 million, or 27 cents per share for the quarter, compared to a net loss of $16.4 million, or 85 cents per share for the same period last year.
The company's stock gained nearly 7 percent in trading today to close at 23, up from yesterday's close of 21-9/16.
Analysts were expecting a smaller loss of 20 cents a share, according to First Call. The consensus estimate was a downward revision made earlier this month after the company warned profits would not keep up with the first quarter's result.
Revenue for the second quarter ending June 30 was $40 million, up from the $27.1 million reported in the same period last year. But revenues were off nearly 50 percent from the $75.6 million generated in the previous quarter.
Despite the loss, Cyrix said it remains on track to achieve significant revenue growth and return to solid profitability in 1997.
Cyrix executives previously blamed the shortfall on an industry-wide drop in demand for midrange processors. They now say the current product lineup positions the company to take advantage of the growth opportunities in both the sub-$1,000 PC market with its MediaGX and the mid-range PC marketplace with its newly launched, 6x68MX multimedia enhanced processor.
Steve Tobak, vice president of corporate marketing, said Cyrix expects revenue to improve in the third quarter as demand for low-end chips and multimedia chips remains strong. The biggest challenge is ramping up production for those high-end chips with big gross margins.
The company shipped twice as many MediaGX chips in the second quarter as it did in the first, but those low-end chips have lower gross margins than the high-end chips that were in short supply, which contributed to the fall in revenue.