OTTAWA, Ontario -- Mitel Corp. here today reported semiconductor sales grew 47% to a record $183.8 million in the company's first fiscal quarter, ended June 30, compared to $125.2 million in the period last year. Overall--including Mitel's communications systems sales--the Canadian company posted total revenues of $328.8 million in the quarter, an increase of just 6% from $311.2 million a year ago.
"Our semiconductor division continues to gain momentum in multiple high-growth areas while the systems business was adversely influenced by lingering Y2K effects," said Kirk K. Mandy, president and CEO of Mitel. The company significantly increased its chip business two years ago when it acquired Plessey Semiconductors Ltd. in the U.K. for $225 million (see Feb. 13, 1998, story).
The Ottawa area company is now in the midst of buying privately-held Vertex Networks Inc., a fabless semiconductor company based in Irvine, Calif., which supplies network and packet-switching ICs. In early June, Mitel agreed to buy Vertex for about $208 million in stock. The purchase is expected to be completed by the end of August.
Mitel's semiconductor sales now exceed its systems revenues. The company's communications equipment sales dropped 22% to $145 million in the just-ended quarter vs. $186 million in the three-month period last year. Mitel's chip business posted an operating income of $44.5 million compared to $5.1 million last year while the company's systems operations suffered an operating loss of $10.5 million compared to a profit of $13.2 million last year.
The company said its semiconductor order backlog grew to $288 million for the quarter, up $35 million over the previous three-month period. "Our Semiconductor business is gaining considerable strength as a result of a sharper focus on high growth opportunities, especially in broadband networking, optical components, and subscriber access," Mandy said.
"We expect these businesses to continue to show strength. In addition, we are looking forward to the technological and business development contributions of our planned acquisition of Vertex Networks which will further position Mitel as a unique supplier offering system-wide, Internet protocol-based, quality of service (QoS) for converging voice and data networks," said the CEO.