FUJITSU BANKROLLS STRUGGLING ROSS' 64-BIT SPARC

by CBR Staff Writer| 03 July 1997

Fujitsu Ltd had clearly taken its eyes off its Ross Technology Inc subsidiary for far too long and following the Austin, Texas- based company's horrific 1997 has stepped in to try and save the Sparc-compatible concern by agreeing to bankroll development of a 64-bit Sparc RISC chip. Following Ross' first death rattle back in February Fujitsu had already agreed to guaranteed a $50m line of credit, part of it through Dai-Ichi Kangyo Bank Ltd's New York branch, through April next year (CI No 3,100). For 1997 Ross recorded a loss of $87.7m to March 31 following a $91m charge for writing down assets, compared with a profit of $18.2m in 1996 on revenue down 17.5% at $83.1m compared with $100.8m last year. The numbers were so bad it didn't even bother breaking out its fourth-quarter figures, but its 10-K filing with the SEC did the talking for it. The company's management was ousted - including founder, chairman, president and CEO Roger Ross - and former president of Scientific-Atlanta's network group Jack Simpson was installed as CEO (CI No 3,108). Fujitsu will give Ross $34.5m between now and April 1999 to develop a V9 Sparc Architecture RISC - therefore compatible with Sun Microsystems Inc's own 64- bit UltraSparc RISC. The part, called Viper, will ship sometime in 1999. Ross says the funding will enable it to defray current operating costs. Interestingly, our sister publication Unigram.X identified the Viper design as far back as 1993 and it's the same one. We asked. The design is slated to tape out in March 1998. Question is, will there be any takers?

Colorado 5

Ross' 10-K filing show that in its fiscal 1997 it has written off $44.1m worth of outdated products ($38.9m) and product left on its resellers' shelves ($5.2m); $16.5m to bad debt; $2.5m to goodwill; and $27.9m for taxes. Sales declined from $30.9m in the first quarter to $11.5m in the fourth. The decrease in sales is attributed to it not winning any OEMs for the latest one-to-four way 200MHz hyperSparc RISC products called Colorado 4, which it had once touted as being as fast as UltraSparc; to the turnover of its executive management; and lack of a 64-bit product to compete with Sun. Breaking out into the manufacture of workstations and servers in 1996 proved disastrous for it. Sun, Fujitsu and other OEMs accounted for 28%, 22% and 16% of total sales for the year. 28% of its business was upgrades. OEM business was 81% of sales in 1996. R&D spending rocketed to 27% of sales in 1997, compared with 15.8% of sales in 1996. It'll go up even more in 1998 with the development of a Colorado 5 follow- on to Colorado 4 due by the end of this year. In addition to the $50m credit facility with Dai-Ichi Kangyo Bank Ltd's New York branch guaranteed by Fujitsu, Ross had borrowed $43.5m from the bank in 1996. It used the $64.3m generated from its 1996 IPO to repay an even earlier $35.5m debt to Dai-Ichi. On March 31 1997 Ross had $2.8m cash and $6.5m remaining of its $43.5m loan. Fujitsu owns 60% of Ross, 5% is owned by Sun and 35% by employees and the public. It has 240 employees; less than it had at the beginning of its 1997 fiscal. The company says its first quarter will produce a significant loss, based on the results of the quarter to date and other issues that have surfaced and been resolved.

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