Cyclical clients hurt Gennum’s outlook

Article Excerpt

GENNUM CORP. $7.00 (Toronto symbol GND; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 35.4 million; Market cap: $247.8 million; Price-to-sales ratio: 2.0; Dividend yield: 2.0%; TSINetwork Rating: Average; www.gennum.com) makes equipment that stores, manipulates and transfers video signals. It also makes chips that improve the flow of data inside computer networks. In its third quarter, which ended August 31, 2010, Gennum earned $5.3 million, or $0.15 a share (all amounts except share price and market cap in U.S. dollars). That’s a big improvement over the $4.3 million, or $0.12 a share, it lost a year earlier. However, the year-earlier results included a $5.5- million restructuring charge related to a 10% cut that Gennum made to its workforce. Sales rose 60.8%, to $34.4 million from $21.4 million. Gennum mainly sells its products to broadcasters, and the improving economy is giving them more money to spend on new equipment. New products are also fuelling Gennum’s sales. The company spent $9.4…

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