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InFocus Q1 Revenue Drops 18%

5/02/2006 02:52:00 PM Eastern

Wilsonville, Ore. — First-quarter revenue for digital video projector manufacturer InFocus dropped 18 percent from a year ago, to $112 million, contributing to a posted net loss of $16.4 million.

The net loss increased from a $7.9 million net loss in the fourth quarter of 2005, and a $14 million net loss in the first quarter of 2005, the company said.

Operating losses, however, were narrower in this year’s first quarter than last, the company reported. InFocus lost $9.2 million on operations, compared with an operating loss of $23.5 million on last year’s first-quarter revenue of $137 million.

Gross margins improved to 14.9 percent in the first quarter of 2006, from 12 percent and 7.3 percent in the fourth quarter and first quarter of 2005, respectively. Overall, average selling prices were down 7 percent quarter-to-quarter, primarily a result of changes in the mix of products sold as opposed to price reductions across the product portfolio, the company said. Projector unit shipments were approximately 94,000 units in the first quarter, down about 1 percent from the prior quarter.

Included in the first-quarter 2006 financial results was a restructuring charge of $1.1 million, non-cash stock-based compensation expense of $0.3 million as a result of implementing the new stock option expensing accounting standard, and a non-cash other expense of $7.5 million as a result of recording an impairment of investments in two start-up technology companies. In total, the items accounted for $8.9 million of the net loss recorded for the first quarter, the company said.

The company's share of losses related to South Mountain Technologies, its joint venture with TCL, was $1.6 million in the first quarter, compared with $1.8 million in the fourth quarter of 2005. Its share of income related to Motif, a joint venture with Motorola, was $1.1 million in the first quarter, compared with $0.9 million in the fourth quarter.

InFocus said its annual report has been delayed by an internal investigation into shipments of products to restricted companies. “The severity of this situation is significantly less than initially thought,” the company said.

For now, InFocus said it has avoided a Nasdaq delisting. The exchange had warned the company that it faced delisting for delaying the filing of its annual report. However, InFocus said it would file the annual report on July 7 and its first-quarter report on July 17.

Meanwhile, the company’s investigations into revenue recognition and business practice in China are still in process, and likely to continue through June. It said the possible financial impact of the investigations was not known.

The company expects to show operating profits in the second quarter, based on projections for modest revenue growth.

“We made progress toward our goals in a number of areas and took positive steps forward financially and operationally during the first quarter, putting us in a position to achieve our goal of returning to operating profitability in our core business in the second quarter of 2006,” stated Kyle Ranson, InFocus CEO.