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Cobra Post Quarterly Profit, Lower Sales

7/23/2008 12:15:00 PM Eastern

Chicago — Cobra Electronics reported a profit for its fiscal second quarter, ended June 30, but lower sales due to changes in its mobile navigation strategy.

Cobra reported net earnings of $1.7 million for the quarter vs. a loss of $434,000 during last year’s second quarter, due to improved gross margins and reduced operating expenses.

That offset a decline in sales to $34.3 million from $39.2 million in the prior year's second quarter. Cobra also reported that the performance products limited (PPL) segment was highly profitable and accretive to earnings, as sales increased by 43 percent and gross margins improved significantly. The second earn-out period for PPL's former shareholders ended during the second quarter and, based on PPL's financial results, it is anticipated that an earn-out payment will be payable.

"We are pleased with Cobra's improved performance in the second quarter," said Jim Bazet, Cobra's president/CEO. "In particular, the performance of PPL was very strong, continuing the trends evident in their first quarter results. New business opportunities and a broad assortment of mobile navigation offerings drove higher sales and an increase in operating earnings to $1.9 million from $81,000 in the prior year's second quarter. In the Cobra segment, higher gross margins and lower operating expenses led to earnings from operations of $782,000, as compared to a loss from operations of $1.3 million in the prior year."

Mobile navigation sales in the Cobra segment accounted for approximately $4.0 million of its net sales decline, reflecting the company's strategy to discontinue development of mass marketed mobile navigation products for the North American market and focus its efforts on niche opportunities.

Additionally, sales of two-way radios and radar detectors declined, due to weak store traffic and competitive pressures, while citizens band radio sales improved, reflecting the launch of the 29 LTD BT — the only CB radio with Bluetooth wireless technology.

Net sales in the PPL segment increased by more than $1.6 million, including strong growth in the mobile navigation product line and continued sales of SD cards containing speed camera locations and other data for use in smartphones, Cobra said.

For the first half net sales were $71.3 million, up from $63.2 million in the previous year’s first half, and net earnings of $1.79 million compared with a first-half net loss last year of $1.15 million.