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CNNfn after the bell
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July 22, 1999: 7:48 p.m. ET
Reebok stumbles, Komag keeps up the bad news, and St. Jude in good health
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NEW YORK (CNNfn) - Thursday's after the bell activity saw a footwear company stub its toe on an earnings block, while a computer disk company predicted continued hard times.
Reebok International Ltd.
Reebok International Ltd. (RBK) was out of step with Wall Street's earnings expectations.
The Stoughton, Mass., footwear, apparel and equipment company reported second-quarter net income of $4.6 million or 8 cents per share, tripping over First Call Corp.'s estimate figure of 12 cents per share.
Reebok reported net income of $6.1 million or 11 cents per share in the year ago period.
Net sales were $697.4 million, compared to $760.6 million in the 1998 second quarter.
In the U.S., Reebok footwear sales in the current quarter were $245.1 million as compared to sales of $268.9 million in the 1998 quarter, a decrease of 8.9%. Reebok apparel sales in the U.S. (including the Greg Norman Collection) were $59.2 million, a decrease of 25.8% from domestic apparel sales of $79.8 million in the prior year quarter.
Sales of the Reebok Brand outside the U.S., including both footwear and apparel, decreased 6.9% in the 1999 second quarter to $265.8 million from $285.6 million in the second quarter of 1998.
For the six month period ended June 30, 1999, net income was $22.5 million or $.40 per share as compared with net income of $2.8 million or $.05 per share for the 1998 comparable period.
The 1998 six-month period results include the effect of a net after-tax special charge of $23.7 million or $.41 per diluted share.
Komag Inc.
Komag Inc. (KMAG), the leading independent maker of magnetic thin-film disks used in computer hard drives, reported better than expected results, but painted a bleak picture of the future.
The San Jose, Calif.-based company said it will further reduce the size of its U.S. operations because of continued weak unit demand and aggressive pricing within the disk industry.
Komag also said it expects to record a significant charge associated with the downsizing in the third quarter.
The company reported a second-quarter net loss of $38.2 million or 60 cents per share based on 64.2 million shares, besting First Call's estimate of 71 cents per share.
The net loss for this period included goodwill amortization of $7.0 million related to the disk manufacturing operation acquired from Western Digital Corporation in April 1999 and $4.3 million for work force reductions effected by the end of the second quarter.
Due to weak unit demand the company closed the former WDC media operation at the end of June, nearly fifteen months ahead of an earlier transition plan. As part of this accelerated closure, the company cut about 400 jobs.
Net sales totaled $93.2 million, compared to $78.8 million in the year ago period.
Stephen Johnson, president and chief executive officer, said the condition of the disk industry was very difficult and the company would have to lower revenue growth expectations in the immediate future.
"As a result of these lower expectations we are reorganizing and reducing staffing levels at our U.S. operations by approximately 33 percent," Johnson said." The departure of such a significant portion of our dedicated U.S. employees saddens us immensely but this work force reduction is the unfortunate consequence of extremely difficult industry conditions."
Herman Miller Inc.
Officer system manufacturer Herman Miller Inc. (MLHR) opened up its cubicle to acquire Geiger Group Inc. ("Geiger Brickel") maker of high quality wood furnishings for the contract furniture industry.
The Zeeland, Mich.-based Herman Miller will pay the purchase price by issuing 1.3 million shares to Geiger Brickel's shareholders, along with $5 million in cash.
Also, former Geiger Brickel shareholders may be entitled to an additional payment based on its financial performance over a three year period.
"We anticipate the addition of Geiger Brickel will increase Herman Miller's revenue by nearly 3.5% in the first year," said Brian Walker, Herman Miller's chief financial officer. "The transaction will be immaterial to earnings per share in the first year and begin to positively impact our economic value added in year three."
The transaction has receive regulatory approval and is expected to close July 30.
St. Jude Medical Inc.
St. Jude Medical Inc. (STJ) had just what the doctor ordered in the earnings department.
The St. Jude second-quarter net sales of $29.4 million or 11.3 percent higher than the comparable period of 1998 and a record for the company.
Net income for the second quarter of 1999 was $37.2 million or $.44 per diluted share, one penny ahead of First Call Corp.'s estimate of 43 cents per share.
In the second quarter of 1998, St. Jude reported net income, before a one-time gain, of $32.2 million or $.38 per diluted share. Net income including the $7.8 million net gain on marketable securities was $40 million or $.47 per diluted share.
First half 1999 net sales were $557.4 million, an increase of $38.7 million or 7.5% over the $518.7 million reported in the comparable period of 1998. The stronger U.S. dollar reduced the first six months sales by approximately $1.2 million. 
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