Largely on the strength of its distribution business, Bell Microproducts Inc. posted double-digit sales increases for the quarter and year ended Dec. 31.
The San Jose, Calif.-based distributor, which also owns a contract-manufacturing unit, reported revenue of $211.7 million for the fourth quarter, up 20% from third- quarter revenue of $175.7 million, and a 52% increase from $139.6 million in the same period of 1997.
Net income for the quarter was $2.4 million, an increase of 12% from $2.1 million posted in the previous quarter, and a significant improvement from $106,000 reported in the fourth quarter of 1997.
Quarterly distribution sales reached $185.5 million, a 25% rise from $148.8 million in the prior quarter.
"Our strength in mass-storage sales-both to our existing customer base and those of [acquisitions] Tenex and Almo-continued throughout the quarter, although gross margins were under significant pressure," said Don Bell, chairman, president and chief executive, in a statement.
Bell Micro's gross-profit margin fell to 9.2% from 10% in the prior quarter and 9.8% in the year-ago period due to pricing pressure, a shift in product mix toward more computer products, and intensifying competition throughout the year, according to the company.
Semiconductor sales in the quarter, however, increased 13% sequentially; but sales within Bell Micro's contract-manufacturing business, Quadrus Manufacturing, fell nearly 3%, to $26.2 million, from $26.9 million in the previous quarter, Bell said.
"The manufacturing business wasn't profitable in the fourth quarter. However, we added new customers and reduced operating costs. The fourth quarter's overall net income was the highest in the company's history," he added.
Total revenue for 1998 reached a record $661.4 million, up 24% from $533.7 million reported in the previous fiscal year. Net income for 1998 was $6.1 million, an increase of 30% from $4.7 million posted in fiscal 1997.
For the year, distribution revenue tallied $575.3 million, up 25% from $460.5 million reported in 1997. Revenue from the Quadrus manufacturing division was $86.1 million, up 18% from $73.2 million the previous year.
Operating expenses as a percentage of sales improved to 7.5% from 8.3%.