General Instrument posts loss
Despite a 14 percent jump in sales, General Instrument announces a net loss of $17 million.
The company announced losses of 12 cents a share; Wall Street was expecting a gain of 30 cents a share, according to First Call.
Even excluding restructuring charges, General Instrument's net income would only have been $42 million, or 30 cents a share, falling short of the previous year's results of $54 million, or 39 cents a share.
The company attributes some losses to increased investment in market expansion; research and development for future video, voice, and data systems; and a higher effective income tax rate.
The quarter's results included $59 million in after-tax charges related primarily to the transition to the company's next-generation digital products, the write-down of certain assets, and costs related to recently announced restructuring plans.
The new plan, announced January 7, is expected to be completed this summer through a tax-free spin-off to shareholders. It will create three independent public companies to focus on global growth opportunities: NextLevel Systems; CommScope; and General Semiconductor.
"The restructuring will give management and employees of each company the ability to focus on its own business, markets, customer requirements, and global growth opportunities," company chairman and CEO Richard Friedland said in a statement.
NextLevel Systems, a worldwide supplier of systems and components for high-performance networks delivering video, voice, and Internet and data services, is comprised of GI's cable, satellite, telephony, and data businesses, with 1996 sales of $1.8 billion.
CommScope is a manufacturer of coaxial cable and a supplier of high-performance electronic cables, with 1996 sales of $572 million.
General Semiconductor, currently GI's Power Semiconductor division, is a supplier of low- to medium-power rectifiers and transient voltage suppressors, with 1996 sales of $362 million.
Despite fourth-quarter charges, the company said it is approaching an upswing.
The transition to GI's next generation of digital and analog systems for cable and satellite networks is nearly complete. Orders are beginning to recover for Power Semiconductor products; its third-to-fourth quarter orders increased by 31 percent.
Sales for the year ending December 31 were $2.7 billion compared to $2.4 billion in 1995. Excluding restructuring, one-time, and other charges, operating income was $289 million, compared to $345 million in 1995. Net income was $149 million, $1.09 per share, compared to $214 million, $1.58 a share.