Rockwell Posts Big Loss, Citing Remake Expenses

Hit hard by the cost of its ongoing restructuring, electronics giant Rockwell International Corp. said Monday that it lost $482 million in its fiscal 1998 third quarter after taking a $587-million charge stemming from its corporate overhaul.

Separately, Costa Mesa-based Rockwell said a federal appeals court rejected its protest of a $58-million jury award lodged against it last year in a theft-of-technologies case.

Included in the financial statistics released Monday was a $32-million loss for the company’s Semiconductor Systems division in Newport Beach, soon to be spun off as a separate publicly traded company.

Rockwell’s net loss, equal to $2.47 a share, compares with a year-earlier profit of $167 million, or 78 cents a share.

In the past two years, Rockwell has transformed itself from a defense and aerospace contractor to a consumer electronics firm, shedding units with annual sales of about $10 billion in the process.

The company says it anticipates emerging from its reorganization as a $7-billion-a-year business.

For the first nine months of its fiscal year, Rockwell posted a loss of $301 million, or $1.51 a share, compared with a year-earlier profit of $535 million, or $2.44 a share.

Exclusive of its reorganization charges and the loss from the semiconductor unit, Rockwell posted a profit from ongoing operations of $88 million, or 45 cents a share, down 27% from $120 million, or 56 cents a share, from the same operations a year ago.

Revenue from continuing operations in the third quarter ended June 30 was nearly $1.7 billion, up slightly from $1.6 billion a year earlier. The company did not report revenue from the semiconductor unit.

Profit from continuing operations for the first nine months was $435 million, down from $439 million, while revenue rose slightly to $4.9 billion from $4.6 billion.

Rockwell shares fell 69 cents Monday, closing at $47 on the New York Stock Exchange.

In the technology theft case, which involves Rockwell’s semiconductor unit, a three-judge appeals panel in Washington, D.C., sided with Newport Beach-based Celeritas Technologies Ltd. in its 1995 suit charging that Rockwell stole technology that increases the rate of data transmission over analog cellular networks.

Rockwell, the world’s largest maker of chips used in computer modems, now must decide whether to pay the judgment or ask either the full appeals court or the U.S. Supreme Court to review the case. Company officials said they were disappointed but had not yet decided how to respond to the ruling.

Cellular modems allow computers to connect to the Internet and other online networks without using phone lines. Until recent years, transmission quality on cellular modems was poor. Celeritas developed a product designed to reduce that problem and in 1993 asked Rockwell if it would license the technology. Rockwell declined, but in 1995 it began shipping chip sets using a similar technology.

Celeritas sued, saying Rockwell stole its technology, violated a nondisclosure agreement and infringed on its patent. A jury sided with Celeritas on all three charges, and a federal judge in California eventually awarded the company almost $58 million in damages.

The appeals panel upheld the verdict on the nondisclosure agreement.

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Cost of Change

Rockwell International reported a third-quarter loss of $482 million because of restructuring charges and discontinued operations. Sales, earnings trend in millions:

Sales 1998: 3rd qtr. $1,66 billion*

* First time that semiconductor unit’s revenue not included.

Net Income 1998: 3rd qtr. -$482 million

Sources: Bloomberg News, Rockwell International