| Article: 10578
From: [email protected] (Bill Zimmer)
Newsgroups: comp.sys.amiga.misc
Subject: New Generation of Amigas
Date: 3 Dec 91 18:44:46 GMT
Sender: [email protected]
Hot on the heels of last week's Inquirer article, the following is from
yesterday's (Monday, December 2, 1991) edition of the Philadelphia Inquirier:
----------------- Begin newspaper article -------------------
Business Section - Page D1
COMMODORE SEEKS NEW U.S. AMIGOS
By Valerie Reitman
Inquirer Staff Writer
NASSAU, Bahamas -- Dan Hess flew from Bellefontaine, Ohio, last week
to an annual shareholders meeting in the Bahamas with one question for
the directors of Commodore International Ltd.
Why wasn't the company advertising its Amiga computer, which he
thinks is fantastic, more heavily in the United States? Such commercials
could show the machine's capabilities -- from word processing to video
games to animation.
"We could crush Nintendo," Hess, whose family owns about 2,000 shares
of Commodore, told company directors. "Commodore needs its name stamped
around."
Irving Gould, the company's chairman, acknowledged his frustration
in getting dealers to stock and promote the product.
"We've gone on several advertising campaigns," Gould said. "If we
took spot ads every 15 minutes on every station, if we don't have store-
fronts and product distribution, it still wouldn't make any difference.
It's no good -- it's the chicken and the egg."
Indeed, while Commodore is second only to IBM in personal-computer
sales in Europe, how to crack the North American market is a problem
that has vexed Commodore for years as it competes with top sellers such
as IBM, Apple and Compaq and the IBM clones.
Although many of Commodore's computer users are zealous -- in fact,
some live up to Gould's term, fanatic -- the West Chester company
can't seem to get much of a hold in the biggest and most lucrative market
in the world: the United States. It reaped 85 percent of its fiscal 1991
sales of $1.04 billion in Europe.
Despite multimillion-dollar television and magazine advertising blitzes
in recent years, the North American operation continues to bleed red ink.
The reasons range from the recession to a lack of dealers who will stock
the Amiga computer line to Commodore's image as a company that makes only
game machines. The Amiga, the driving force behind Commodore's worldwide
success, is particularly popular in niche markets in the United States and
Europe because of its splashy graphics and video capabilities.
Commodore's losses in the United States and Canada grew to $24.7 million
on sales that plummeted by one-third to $110.1 million in the fiscal year
ended June 30. That compared with a loss of $17.7 million on sales of
$163.5 million in the prior year.
In January, Commodore fired Harry Copperman, president of the North
American division, the latest in a string of executives that Gould has
fired after short tenures that failed to produce a North American turn-
around. Most of the executive team Copperman installed is gone as well.
Copperman had unsuccessfully tried to push the Amiga in the federal,
education and business marketplaces.
Now at the North American helm is Jim Dionne, former head of the Canadian
operation, who did not return phone calls. As the company tries to reduce
expenses to compensate for plummeting sales, it has laid off about 100 people
and shifted most of the manufacturing and assembly out of West Chester to
other Commodore plants, employees said.
Such actions have given its computer users cause to wonder whether
Commodore will abandon the North American market altogether.
But Gould assured the fewer than one dozen shareholders gathered at
the annual meeting at a posh Bahamian retreat that the U.S. market was
too lucrative to give up. Commodore officially is headquartered in Nassau,
although it has no office of its own there. The address it lists as its
Bahamian headquarters is that of its agent, Ernst & Young.
"The United States is 50 percent of the world market in anything," Gould
said. "One would have to be pretty stupid to give up 50 percent of the
world market."
Commodore president Mehdi Ali hinted that the company was working on
a "new generation" of Amigas to come out in the next 18 months -- and
indicated that the company might make a bigger push then.
"We don't have critical mass" now, Ali said. "With the next generation
of Amiga, we will make a big push. We can't flog something we've been
flogging for four years in the same way."
"I constantly get letters from users," Gould said. "I don't call them
users, I call them fanatics. With all those letters, I wish somebody would
tell us how" to sell computers in North America.
Gould and Ali declined to answer questions after the meeting about the
"new generation" of products.
Despite the losses in the United States, Commodore's stock is being
recommended by two analysts because of its strengths in Europe. Mark
Stahlman, an analyst at Alex, Brown & Sons, reiterated his "strong buy"
recommendation last Wednesday.
"It appears that sales momentum is strong," Stahlman said. "The
company is growing at better than 30 percent for the year, and this
quarter the strong momentum continues."
Nevertheless, the stock isn't for the faint of heart. It has
ricocheted from as low as $4.50 per share in late 1990 to a high of
$21.60 earlier this year. Since Commodore doesn't pay dividends,
shareholders depend entirely on stock-price gains for profits.
International Data Corp., a market research firm, says Commodore
controls 12.4 percent of the personal-computer market in Europe, slightly
behind IBM's 12.7 percent. Apple's Macintosh computer was way behind
with 5.2 percent, Compaq with 4.6 percent and Oivetti with 6.2 percent.
While the number of computers Commodore sells in Eurpoe is up
dramatically, Commodore's revenues and profits are highly sensitive
to currency fluctuations.
"Everything is in the translation," Gould said. "If the dollar
weakens, we cheer; if it strengthens, it goes against us." The company
was hurt in the quarter that ended June 30.
Stahlman, the analyst, estimates that Commodore will post $1.20 per
share in earnings in the current, Christmas quarter -- a 7 percent increase
over the same period last year -- on $425 million in revenues, up 10.7
percent over last year.
For the year that will end June 30, 1992, he anticipates profits of
about $72 million on revenues of $1.2 billion.
Commodore also may be liable for tax deficiences of about $74 million
for its U.S. subsidiaries for fiscal years 1981 through 1983, and $35
million for tax years 1984 through 1986, according to a footnote in its
annual report.
The Christmas quarter has traditionally been Commodore's biggest
revenue generator. In response to a shareholder question about the
impact of the recession, Gould replied that "we're rather optimistic"
about the quarter.
However, while the dollar has been weakening against the deutsche-
mark in recent weeks, it is slightly stronger than it was in the same
quarter last year. "So the [quarter-to-quarter] comparison is still
unfavorable," Stahlman said.
Larry Freitag, an analyst at Standard & Poor's Corp., also is recom-
mending the stock. "I'm impressed by the unit growth," he said. "It's
very impressive in any environment, particualarly if you strip out the
currency effects."
Commodore also markets two lines of computers primarily in Europe
that have been selling well despite a slowing worldwide computer market.
Revenues from its line of IBM-compaible machines were up 14 percent,
while sales of its oldest line, the C64, which has found a market in
Eastern Europe, were up 4 percent.
Commodore also has been stuggling with how to market its newest
product line, called CDTV -- a marriage of the television and computer.
Based on Amiga technology, it attaches to a television. Software
developed to date inclues an ancyclopedia and cookbooks. While Commodore
has been testing it in a few markets, Philips has ben taking out huge ads
for a rival product.
Still, Stahlman believes that Commodore's North American division
will soon return to profitability. But he believes that it will "return
to its roots" and that its "new generation" of products will emphasize
the lower-end Amiga 500, which it sells through mass merchandisers.
Such a strategy disturbs users of the high-end Amiga machines,
which Commodore sells through dealers.
Ethan Solomita, a Columbia University computer-science major who
called himself an "Amiga fan who's trashing the company," said users
who exchange information on computer "bulletin boards" complain about
what they see as the dwindling technological lead of the Amiga line
over rivals IBM and Apple. "Everyone is fearful that if they don't
put money in the Amiga, it will just not compete.
"Now, IBM has begun catching up technologically, and Amiga's not
keeping pace," Solomita said. "The operating system and graphics are
catching up, and the prices are dropping. Today, the Macintosh is
starting to become comparably priced, and clones are well under Amiga's
price."
The users and shareholders, such as Dan Hess, complain about Ali's
and Gould's salaries. Gould earned $1.75 million, while Ali earned
$2.4 million. Gould in 1989 was granted 350,000 options, while Ali
was given 120,000 shares in the last fiscal year atop 300,000 options
given previously.
John Akers, chairman of International Buesiness Machines Corp.,
which has 50 times Commodore's sales, made $2 million in salary in 1990.
"I wish he [Gould] would take some money out of his wallet and put
it into marketing." Hess said.
There was even talk among users of a grass-roots movement of
Commodore computer owners to buy shares of stock and gain a controlling
interest in the company. Since Gould owns 20 percent of the shares,
that's kind of a pie-in-the-sky idea.
One shareholder, Edward Gee of Havertown, who attended the meeting
in Nassau said that he requested a list of shareholders from Commodore
last summer, but that the company would not provide it.
----------------- End newspaper article -------------------
Is this an invitation for us to write Mr. Gould and tell him how
"to sell computers in North America"?
Bill Zimmer - [email protected]
Indendence Blue Cross
Philadelphia, PA
|
| Here's the "last week's" article mentioned in the previous reply.
From: [email protected] (Bill Zimmer)
Newsgroups: comp.sys.amiga.misc
Subject: Recent Commodore Stockholders Meeting
Date: 2 Dec 91 16:13:26 GMT
Lines: 84
The following is from the Tuesday, November 26, 1991, edition of the
Philadelphia Inquirier:
----------------- Begin newspaper article -------------------
Stockholders follow Commodore to Bahamas
by Valerie Reitman
Inquirer Staff Writer
NASSAU, Bahamas -- For the third consecutive year, Commodore International
Ltd. yesterday held its annual shareholder meeting in a posh Bahamiam country
club near the home of its chairman and largest shareholder, Irving Gould.
But the distance and expense of getting to the meeting on the island in
the Atlantic during a holiday week didn't stop a handful of small shareholders
of the West Chester company -- mostly zealous users of Commodore's Amiga
computer -- from attending.
"If Gould wants to shut users out, the next meeting's going to have
to be in Siberia," Edward Gee, of Havertown, a medical-equipment technician,
said before the meeting at the Lyford Cay Club.
One dissident shareholder, Richard Ash, of Philadelphia, was physically
ejected by security guards after he tried to introduce a motion to adjourn
the meeting and reconviene it in New York.
Through 1988, the company's annual meetings were held in Manhattan.
At the last session in New York, several shareholders complained about the
company's high executive salaries and perks and the use of the corporate jet.
Ash said yesterday that more shareholders could attend if Commodore's
meetings were held in the United States, since that is where most of its
shareholders live.
"You're holding it in Nassau because you don't want" shareholders to
come, he charged.
Commodore's chief financial officer, Ron Alexander, asked Ash to make
his comments in the question period after official business.
But Ash persisted, saying: "No one is able to attend the meeting in
the middle of nowhere."
Ash, a perennial thorn in Commodore's side, has in the past complained
about management's high salaries, a private jet used to ferry Gould back
and forth to the United States and stock options granted to Gould and
company president Medhi Ali for a penny apiece.
"I've come to Nassau at great expense because I'm a shareholder," Ash
said.
Gould retorted that it was appropriate to schedule the meeting in the
Bahamas: "Are we a Bahamian company?"
Commodore has its headquarters in Nassau, although its North American
base, as well as the company's financial and research operations, are in
West Chester.
The location it lists as its Bahamian headquarters actually is the
office of its registered agent, Ernst & Young, on the third floor of a
small pink ofice building called Sassoon House. About 1,000 companies
represented by firms in the building are listed in the lobby.
"Just one employee of Commodore is located in the Bahamas," said
Paul Clark, an Ernst & Young partner.
When Ash persisted in speaking, Alexander asked him to "leave
peacefully" or be "physically ejected." Then, two guards appeared and
Ash was led from the room.
Gould later apologized to shareholders for "what happened earlier."
In meeting business, Mike Levin, president of the Philadelphia Amiga
Users Group and a student at Drexel University who paid $500 to get to the
meeting, said he was representing the "lifeblood of the company -- its
actual customers." He told Commodore executives that rivals were "catching
up" to Amiga's technology, which has made the computer popular with computer
hackers and graphic artists.
Gee and several other shareholders told company officials that they
were concerned Commodore was not adequately promoting its personal computers
in the United States, where it has consistently been losing money and market
share. At the same time, it has been enjoying stellar sales and profits
in Europe, particularly in Germany, where it is second only to IBM in PC
sales. Overseas sales made up 85 percent of Commodore's $1 billion in
revenues in fiscal 1991, which ended June 30.
While Gould conceded that rivals had gained on the Amiga, he said they
had yet to match it in price compared with performance.
Gould and Ali said they were frustrated in not being able to crack the
North American market. In the year ended June 30, the firm had a loss of
$24.7 million in the United States on sales of $192.8 million. In the
prior year, its North American operation lost $17.7 million on sales of
$259 million.
With European and other operations included, it had profits of $48.2
million on sales of $1.05 billion in fiscal 1991, and $1.5 million on sales
of $887.3 million in fiscal 1990.
----------------- End newspaper article -------------------
Bill Zimmer - [email protected]
Indendence Blue Cross
Philadelphia, PA
|