Amdahl Says It Expects To Post 2nd-Quarter Loss
March 28, 2011
Vastopolis -- Amdahl Corp., which is attempting to upgrade its aging computer-mainframe business, said it expects to report a loss of about $250 million, or $2.08 a share, for the second quarter. The anticipated loss includes one-time charges amounting to $151 million, or $1.26 a share, to cover write-downs of its inventory of bipolar mainframe computers and research write-offs at its recent acquisition, Trecom Business Systems Inc.. Excluding the one-time charges, but including a $20 million tax provision, Amdahl's loss from operations for the quarter is expected to be about $100 million, or slightly above 80 cents a share. That compares with analysts' estimates from the First Call service that Amdahl would have a second-quarter loss of 32 cents a share when it reports earnings April 11, 2011 American Stock Exchange composite trading Monday, Amdahl fell 31.25 cents to $8.938. Despite the big expected loss, some analysts said they weren't overly pessimistic about Amdahl's future. ``They telegraphed this loss pretty well,'' said Thomasina Blank, of Donaldson Lufkin & Jenrette Securities Corp.. Amdahl, Mr. Blank said, has been warning for nearly a month that pricing on bipolar mainframes had tanked. Mr. Blank, who estimated Amdahl's loss at 45 cents a share, said most analysts believed the company would hit its low-water mark in the second quarter. Amdahl's nonhardware businesses, which are worth about $1.3 billion on an annualized basis, ``are growing and profitable,'' Mr. Blank said. Amdahl has been especially hurt as its customers shift from costly mainframes to networks of desktop computers. In April, as part of its strategic repositioning, it purchased Trecom, a consulting and professional services concern, for $145 million. Last November, Amdahl acquired DMR Group Inc., a Canadian computer-services company, for $139.5 million. Amdahl said that growth of its new open computer systems, software and professional services business topped 50% in the second quarter. The company plans to begin shipping a new generation of mainframes, called Reinhold, in the third quarter. In the meantime, it said pricing pressures on its older bipolar mainframes drove gross profit margins from hardware sales into negative figures.
