SONICblue Announces 2nd Quarter Results
SANTA CLARA, Calif.--(BUSINESS WIRE)--Aug. 2, 2001--
Company Reports Strong, Top Line Momentum in Rio Business;
Pro Forma Operating Profits Improve Quarter on Quarter;
Sensory Science, ReplayTV Acquisitions Completed
Strong, top-line momentum, led by 54 percent year over year growth in Rio sales, enabled SONICblue(TM) Incorporated (Nasdaq:SBLU) to report net revenues of $29.5 million for its 2001 second quarter results. This reflects a 28 percent increase as compared to second quarter 2000 net revenue of $23 million, excluding revenues from the Company's divested graphics chip, multimedia board and Fire GL Graphics businesses. This revenue exceeds the Company's most recent revenue guidance of $24 million. Pro forma operating profits improved through a combination of productivity gains and actions the Company took on gross margins and SG&A.
SONICblue reported a loss of $37.5 million, or $0.46 per share, before one time charges associated with the Company's restructuring, the acquisition of Sensory Science, write-off of certain assets and inventory, amortization, losses from equity investees and losses related to its investment in United Microelectronics Corporation. This compares with a loss of $38.3 million, or $0.47 per share, before similar charges and write-offs in the first quarter of 2001. Net loss for the quarter, inclusive of all charges was $312.5 million, or $3.83 per share. This compares with a net loss of $335.8 million, or $4.11 per share, for the first quarter of 2001.
"We achieved solid, top-line growth and improvement within our ongoing operations during the quarter and we're extremely pleased with our progress," said Ken Potashner, CEO and chairman, SONICblue. "During the quarter we announced the appointment of John Todd as chief operating officer and chief financial officer and we are pleased to have him on the team."
"With the successful close of the Sensory Science acquisition, we finalized plans to distribute our Rio digital audio products through new home entertainment and high-end specialty retail channels, and we anticipate leveraging these channels to include additional offerings in the future," continued Potashner. "We believe the combination of our audio players and receivers, home networking technologies and video-based products, provide us with the necessary platform upon which to add partner-enabled content, services and e-commerce offerings. With our newly-acquired ReplayTV products and services, we're poised to offer the consumer a complete connected home solution which we expect to solidify SONICblue's position as a leader in the fast growing, emerging digital media and home entertainment industry," concluded Potashner.
"Despite softening in the economy, we continue to see strong demand for our core product lines," said John Todd, chief operating officer and chief financial officer, SONICblue. "We plan to drive additional growth through an intense focus on fall and holiday promotions. As we enter the back half of the year, historically our biggest selling season, we're positioned to introduce next generation products that we expect to drive profitable sales figures. We believe that this, coupled with consistent earnings results, better-than-industry growth rates and a more diverse and profitable revenue stream, should result in increased shareholder returns in the near future."
"We've made substantial progress in our company-wide cost reduction efforts and have realized gross margin improvement sequentially month to month," continued Todd. "In support of our profitability goals, we've outlined three areas of focus for the Company: Profitable Revenue Growth and Scale, Quality and Gross Margin and Productivity Improvements. We are also moving to a functional organization that consists of product lines rather than business units. We believe these factors combined will have a positive impact on our business model, moving forward."
"Finally, we plan to monetize the dividend portion of our UMC asset in August with a forward transaction that retains a lot of the upside potential. We may do a second transaction in Q4, and our plan is to monetize up to 50 percent of the portfolio at an appropriate time," concluded Todd.
During the quarter, the Company also introduced AudibleReady Rio 800 and Rio 600 digital audio players, allowing consumers to store and play back audio books and audio editions of newspapers and magazines from a library of thousands of hours available at audible.com.
The Company's first compressed CD product, the Rio Volt, has achieved the leading market position with a 48 percent share and continues to outpace competing products from Philips, Memorex, RCA and other consumer electronic companies. The Company believes that this market is poised to grow rapidly. Both the Rio Volt and Rio 800 have recently received top honors and awards at industry shows and conferences, such as the recent MP3 Summit, and accolades from respected business, technical and consumer publications.
The Company has also begun shipping and volume production of its premier wireless web device, ProGear(TM), into initial broadband-enabled vertical market segments including hospitality, education and healthcare. To further support ProGear's entry into the healthcare market, SONICblue formed a strategic partnership with HealthBlocks, a Web-based medical applications provider. The Company plans to integrate ProGear with HealthBlock's enSite offering, thus enabling the conversion of paper-based clinical information to digital content.
INVESTOR CONFERENCE CALL
Ken Potashner, chairman and chief executive officer, and John Todd, chief operating officer and chief financial officer, will host an investor conference call today, August 2, 2001 at 5:00 p.m., Eastern Time, to review the Company's second quarter results. The domestic dial in number for the call is: 888/469-0648, International: 415/228-3886; Passcode: Earnings. The call will also be open to all interested investors through a live audio web cast via the Internet at www.SONICblue.com and www.streetfusion.com.
A telephonic playback of the conference call will begin on Thursday August 2, 2001 at 6:00 p.m. and will be available through 3:00 p.m., Eastern Time, August 10, 2001. Listeners should call 800/695-5520 (domestic) or 402/998-1089 (international); Passcode: Earnings. For those who are not available to listen to the live web cast, the call will be archived through 3:00 p.m. Eastern Time, August 10, 2001, on both Web sites.
About SONICblue Incorporated (www.SONICblue.com)
SONICblue is a leader in the converging Internet, digital media and consumer device markets. Working with partners that include some of the biggest brands in consumer electronics, SONICblue creates and markets products that let consumers enjoy all the benefits of a digital home and connected lifestyle. SONICblue holds significant financial assets, global marketing capabilities and a focused technology portfolio that includes Rio(R) digital audio players', frontpath(TM) Information Appliances, ReplayTV(R), a licensor of technology for networked entertainment products, and Sensory Science digital audio and video entertainment products.
Except for the historical information contained herein, the matters set forth in this press release, including statements as to plans to distribute the Company's Rio digital audio products and additional offerings through new home entertainment and high-end specialty retail channels, expectations regarding the addition of partner-enabled content, services and e-commerce offerings, the Company's expectation to offer a complete connected home solution and solidify its position as a leader in the digital media and home entertainment industry, expectations regarding market demand and plans for fall and holiday promotions, plans to introduce next generation products and expectations regarding sales of those products, expectations regarding earnings, growth rates and increased shareholder returns in the near future, the Company's plans to organize in product lines rather than business units and expected benefits of this organization for the Company's business model, the expected method, timing and benefits of the monetization of the Company's UMC shares, plans for and expected benefits of the integration of ProGear with HeathBlock's enSite offering, anticipated industry growth and growth of the Company's business, and the Company's strategy and business model, are forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risk and uncertainties that may cause actual results to differ materially, including, but not limited to, manufacturing difficulties, whether the Company can develop and successfully bring to market next generation products in a timely manner, uncertainty in the semiconductor market and the related impact on the value of the Company's UMC shares, financial market conditions in Taiwan and the United States and their impact on the Company's ability to monetize its holdings of UMC shares, unpredictability of market demand and general market fluctuations, whether the Company can develop and maintain strategic alliances and marketing channels, the impact of competitive products and pricing and of alternative technological advances and other risks detailed from time to time in the SEC reports of SONICblue Incorporated, including its quarterly report on Form 10-Q for the period ended March 31, 2001. These forward-looking statements speak only as of the date hereof. SONICblue disclaims any intention or obligation to update or revise any forward-looking statements.
Note to Editors: SONICblue, Diamond, frontpath and HomeFree are trademarks of SONICblue Incorporated. Rio is a registered trademark of RioPort, Inc. and is used by SONICblue under licenses from RioPort, Inc. Other marks referenced herein are the property of their respective owners. ReplayTV is a registered trademark of ReplayTV, Inc.
CONTACT: SONICblue
Heather Stanger, 408/588-8060 (Press Contact)
hstanger@SONICblue.com
Tracy Perry, 408/588-8086 (Investor Relations Contact)
ir@SONICblue.com |
