MANHASSET, N.Y. Custom power supplier Cherokee International Corp. posted net earnings of $0.6 million, or 3 cents per share on sales of $32.0 million for the first quarter, down from $2.2 million, or 20 cents per share on sales of $36.8 million in year-ago quarter.
Cherokee (Tustin, Calif.) said first quarter sales reflected lower than expected demand from a number of datacom customers and the effect of transitioning certain programs to consignment hub arrangements. In addition, the company cited unexpected materials sourcing issues with certain vendors during March, resulting in higher logistics costs and rescheduling of some production.
First-quarter gross margin was 23.9 percent, down from both a year ago and the previous quarter.
Looking ahead to the second quarter, Cherokee expects net sales to decline slightly from the first quarter due to anticipated softness in the telecom market segment.
Cherokee's results and guidance reflect a mixed outlook facing power suppliers, many of whom have cut expenses through restructuring but face uncertain near-term conditions as their customers have pushed out new product launches.
For instance, Artesyn Technologies Inc. (Boca Raton, Fla.) said overall first-quarter 2005 sales of $102.5 million were up from a year ago, but fell short of expectations as the company was impacted by customer delays in launching new programs. Sales in Artesyn's Power Conversion division were $81.3 million, down $2.1 million year-to-year due to a weak server market.
Artesyn said it expects total 2005 sales to rise 8 to 12 percent year-to-year, though much of that growth won't come until the second half.
Another power supplier, Power-One Inc. (Camarillo, Calif.), said earlier this month its first-quarter net sales of $66.7 million met guidance but were down from $68.7 million a year ago, and the company's quarterly net loss of $28.4 million included $14.5 million in restructuring and asset impairment charges.
Power-One expects sales to rise slightly to $68 million the second quarter, but with a 3 to 6 cent per share loss. The company anticipates its aggressive cost-cutting efforts to produce breakeven or positive earnings the second half of 2005.