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Data General on a revenue roll

Data General's stock got a small jolt during trading on news of better-than-expected earnings.

2 min read
Data General's (DGN) stock got a small jolt on news of better-than-expected earnings today.

The company reported net income of $10.4 million, or 25 cents a share, for its first quarter ending December 28 because of increased sales of its storage and server line. Last year, the company reported a net income of $4.7 million, or 12 cents a share.

This morning, the sever and storage maker's stock was boosted almost 5 percent, trading as high as 19, skimming just below its 52-week high. The stock closed the day at 18-3/8, up 3/4 of a point.

The company reported revenue of $348.5 million, compared with $327 million for the comparable quarter a year ago. This marks Data General's sixth consecutive quarter in which the company reported higher product revenues over the comparable quarter in the prior year and are investing in that record.

"We have increased our investment in research and development to insure that we maintain our position as a technology leader by developing new server and storage products as well as products for the Internet," CEO Ronald Skates said in a statement.

Analysts were expecting about 19 cents a share with estimates ranging from 16 cents to 20 cents per share, according to First Call.

"They have two growth drivers: the CLARiiON storage line and its AViiON server line, which used to run on an old Motorola chip but is now running on Intel," said Paine Webber analyst Stephen Smith.

Revenues from the AViiON server line grew 15 percent, and its Intel-based systems generated over 50 percent of AViiON revenues for the quarter. CLARiiON quarterly revenues surpassed $100 million for the first time.

During the quarter, Data General expanded the AViiON and CLARiiON lines by introducing a preassembled Windows NT clustering product; three AViiON servers based on Intel's 200-MHz Pentium Pro processors; and the CLARiiON Series 3000, a high-performance disk array for companywide computing environments.

"Data General had a very strong quarter and I continue to recommend the stock," Smith said. "We expect further sequential improvements and continued healthy growth in the future."

The company expects to ship its AViiON Pentium Pro servers based on the NUMA (nonuniform memory access) architecture to its OEM partners this quarter. This is the company's second product family of NUMA-based technology systems.