Audiovox's Fiscal 1st Quarter Sales Decrease By 42%

Hauppauge, N.Y. — Although sales in its electronics subsidiary remain strong — with mobile video systems and consumer electronics lines showing the greatest increases — Audiovox reported a 42 percent drop in overall sales during its first fiscal quarter, reaching $191 million, compared with $331.1 million in the year-ago period.

Audiovox recorded a net loss of $3.9 million for the first quarter, ended Feb. 28, after a cumulative effect of change in accounting principle of $240,000, compared with net income of $2.6 million in the same three months a year ago.

Much of the company's sales shortfall can be attributed to its wireless subsidiary. "First quarter wireless sales were adversely affected by a delay in carrier approvals of our new 1X phones, which required software modifications to correct a chipset issue," said chairman/CEO John Shalam. He went on to say Audiovox 1X phones are being tested by carriers and the company expects approvals shortly.

Audiovox expects that its new products, which center on 1X technology, will help restore margin and profit during the second six months of the year. Included among these products is its Thera, which combines Microsoft Windows powered Pocket PC 2002 software with wireless handset connectivity, for seamless Internet access, according to the company.

Among the electronics subsidiary products showing the most solid sales increases in the quarter were mobile video systems and CE lines, the company said. Audiovox said sales of mobile video continued to be strong through the first quarter, despite the end of zero-percent financing.

The company expects the first half of fiscal 2002 to continue to be affected by the delay of its 1X product introduction, as well as an overall reduction in demand and intense price competition.