Audiovox: No Damage From FLO TV's End

By Joseph Palenchar -- TWICE, 10/18/2010

HAUPPAUGE, N.Y. — Audiovox expects no financial impact from FLO TV’s decision to turn off direct-to-consumer mobile-TV service early next year.

That’s what president/CEO Pat Lavelle said last week during a conference call with financial analysts after its fiscal second quarter.

The company “expects no exposure” to its financial statements and will work with FLO TV “to transition … with no loss to  Audiovox,” he said.

Referring to FLO TV, Lavelle said Audiovox was disappointed in FLO TV’s decision to turn off service and was a “firm believer” in the service’s “long-term success.” The decision “will not have a significant impact on sales” because Audiovox knew it would take time to build the market and did “not anticipate overly high sales in the first year,” he noted.

Audiovox expects lost FLO TV sales to be replaced by sales of ATSC M/H products that deliver the signals of local over-the-air HDTV stations to portable and mobile devices in motion, he said.

Audiovox marketed a FLO TVequipped portable DVD player and FLO TV tuners that could be added onto existing car-A/V systems.

Lavelle also discussed International CES introductions, saying Audiovox “fully expects” launch of the RCAbrand Air Power battery charger, which wirelessly “harvests” 2.4GHz Wi-Fi energy to charge a connected portable device.

He noted Audiovox plans a CES launch of 14 OEM-look in-dash head units for the expediter channel with multimedia, navigation, satellite-radio and HD Radio capabilities.

And during the quarter its Zentral Home Command devices, which turn BlackBerrys, iPhones and iPod Touches into Bluetooth remotes to control home-entertainment systems, should begin shipping. They were shown at January’s CES along with a product that turns a BlackBerry into a Bluetooth garage-door remote.

As for the Air Power product, shown at the 2010 CES conventions, Lavelle said a patent application is proceeding and “testing is going well.”

Audiovox reported slightly higher sales but lower net income in its fiscal second quarter, ended Aug. 31.

Net sales for the second quarter were $129.3 million, an increase of 3.5 percent compared with net sales of $124.9 million reported in the comparable year-ago period.

Net income for the quarter was $600,000, compared with net income of $2.8 million a year ago. Net income for the prior year included an income tax benefit of $1.6 million.

Electronics sales were $95.2 million for the 2011 fiscal second quarter, compared with $79 million for the three months ending Aug. 31, 2009, an increase of 20.5 percent. Electronics sales were positively impacted by the acquisition of Invision Automotive Systems, new OEM programs, and higher aftermarket sales of audio, video and security products for the mobile market.

Electronics represented 73.6 percent of net sales for the quarter, compared with 63.3 percent a year ago.

Accessory sales were $34.1 million for the quarter, compared with $45.9 million in the prior year, a decrease of 25.6 percent.

Excluding the impact of antennas, accessory sales were down 5.3 percent, which can be attributed to weakness in consumer spending similar to core electronics products.

Accessories represented 26.4 percent of sales for the quarter, compared with the prior year’s 36.7 percent share. — Additional reporting by Steve Smith