Emerson Fiscal Q1 CE Revenue Declines 41%
Staff -- TWICE, 9/3/2001
PARSIPPANY, N.J.— Consumer electronics revenue dropped about 41 percent at Emerson Radio during the fiscal first quarter ending June 30, reaching $49.1 million, compared with $82.6 million in the same period last year.
In the first quarter of 2000, retail ordering patterns departed from those typical of the CE industry, said Emerson.
With the exception of the first quarter in 2000, the company generally experiences stronger CE products demand from its customers in the fiscal quarters ending Sept. 30 and Dec. 31, partially due to a build-up of orders for the Christmas selling season.
However, in last year's first quarter, at the insistence of retailers, a disproportionate amount of Christmas orders was shipped. This was based on retailers having insufficient stocking inventory in the prior holiday selling season, combined with shortages of chips and other components, reducing product availability for last year's holiday season, said the company.
Due to this, Emerson's first-quarter 2000 revenues were atypically strong. With the resumption of normalized ordering patterns, and to a lesser extent, weaker prevailing economic conditions, current first-quarter CE revenues took a big drop, compared with last year.
At the same time Emerson has been looking to improve margins in its core CE segment. Gross margin as a percent of revenue in the first quarter reached 15 percent, 240 basis points higher than the 12.6 percent recorded in the same three months last year. The improvement was attributable to the CE segment's lower product returns and a greater impact of licensing revenue on the margins, since such licensing revenue has minimal associated costs.
Both CE operating income and net income as a percent of revenue climbed 100 basis points in the first quarter, with operating income hitting 6 percent and net income 5 percent.
"The gross margin improvement, in part, reflects the continued rewards of our various licensing agreements," said Geoffrey P. Jurick, chairman/CEO, referring to its video license agreement with Funai.
