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Cobra Cites Loss After GPS Exit

2/22/2008 09:37:00 AM Eastern

Chicago — Cobra Electronics reported a net loss of $3.8 million for the fourth quarter, ended Dec. 31, 2007, compared with net income of $1.8 million for the period a year earlier, due to its exit from the GPS business in December.

Cobra’s net loss included a charge to earnings of $7.7 million in a write-down of its GPS assets. President and CEO Jim Bazet said Cobra exited the mainstream GPS market because “we recognized our products did not have the critical mass to compete in the mass market channels.” The company will continue to offer niche GPS products.

“Our decision was the right move and has freed up tremendous resources for us to focus on other products,” Bazet added.

Excluding GPS for each period, Cobra would have had an adjusted operating income of $863,000 in the fourth quarter, compared with an adjusted operating income of $1.6 million for the period last year.

Sales for the quarter declined by nearly 15 percent from period a year ago, although sales at Cobra’s overseas location-based services company Performance Products Limited climbed 60 percent.

For the full year 2007, Cobra reported a net loss of $4.6 million on sales of $155.9 million compared with a net loss of $1.6 million on sales of $153.7 million in 2006.

Apart from GPS, adjusted sales for the year were $146.6 million, an 11.7 percent increase from adjusted sales of $131.2 million in 2006.

Radar-detector sales gained 17 percent over the year earlier; two-way radio sales declined by 13.1 percent, and CB radio sales gained by more than 6.5 percent. Marine radio and power inverter sales, two growth areas for Cobra, continued to show improvements. Marine radio sales in the fourth quarter increased by more than 50 percent, and power inverter sales increased by nearly 15 percent in the fourth quarter and 25 percent for the year.

Cobra's gross margin in the fourth quarter declined to 10.8 percent from 25.8 percent due to losses in GPS. The adjusted gross margin however was 26.8 percent compared with an adjusted gross margin of 28.9 percent for the quarter a year earlier.