Earnings Briefs

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Lexmark Cuts Work Force
Lexington, Ky. — Despite difficult market conditions that impacted its growth, printing and imaging solutions supplier Lexmark International grew its laser and inkjet units at a double-digit rate in the second quarter. However, the company said it is reducing its workforce by 275 employees through the first half of 2006, resulting in pretax charges of $26 million. On an annual basis, the employee reduction is expected to make $23 million available to reinvest. Second-quarter revenue was relatively flat, coming in at $1.28 billion, up from $1.25 billion a year ago. This 3 percent increase was driven by 9 percent growth of laser and inkjet supplies revenue. Net earnings dropped to $79.9 million in the three months, ended June 30, down from a year-on-year $136.6 million. Lower product margins, partially offset by a higher mix of supplies, reduced gross profit margin in the second quarter to 34.6 percent from the prior year’s 35.3 percent. First-half revenue climbed 5 percent, hitting $2.6 billion, from $2.5 billion a year earlier. Net earnings dropped to $203.8 million from a year-ago $257.6 million, while gross profit margin slipped to 33.8 percent, from 34 percent in the same period last year.

SanDisk Q2 Revenue Jumps, Earnings Fall
Sunnyvale, Calif. — Flash-storage card products maker SanDisk increased second-quarter revenue by 19 percent, hitting $514.9 million, up from $433.3 million in the year-ago period. Product revenue in the same time frame climbed 16 percent, reaching $453.8 million, compared with $391.3 million in the second three months of last year. However, operating income for the period, ended July 3, slipped to $106 million, or 21 percent of revenue, compared with $110.3 million, or 25 percent of revenue in the second quarter of the prior year. Gross margin climbed to 42 percent from a year-on-year 41 percent. Net income was flat, at $70.5 million for the three months, down from $70.6 million the previous year. SanDisk reported operating expenses in the quarter rose to $108.1 million from a year-ago $68.3 million. For the six months, revenue reached $965.9 million, up from the previous year’s $820.2 million. Net income in the first half was $145 million, up from $134.2 million in 2004.

Logitech Sales, Net Jump
Fremont, Calif. — Personal peripherals maker Logitech recorded a 26 percent increase in fiscal first-quarter sales, coming in at $334.7 million for the three months, ended June 30, up from $266.6 million the previous year. Operating income climbed 17 percent, hitting $25.2million, compared with a year-ago $21.6 million, while net income for the first three months jumped 19 percent, reaching $22.4 million, from $18.9 million year-on-year. Gross margin remained in the targeted 32 percent to 34 percent, aided by healthy year-over-year improvement in gross margin for the audio category. Retail sales soared 27 percent, rising to $284.3 million in the three months, from $223.5 million, driven by growth in audio, console gaming and corded products. Retails sales of audio products moved up 155 percent in the quarter, year-over-year, fueled by the increasing popularity of digital music, such as the MP3 format, which has created “explosive” demand for Logitech speakers and music headphones. Retail sales of console gaming products grew by 84 percent in the first quarter, due to increased demand for cordless game pads, console wheels and a new line of peripherals for the PSM entertainment system.

Imation Rev Climbs 10.7%, Income Triples
Oakdale, Minn. — Optical media products continued to contribute to revenue growth at Imation, as did solid growth in flash media, with the company recording a 10.7 percent rise in second-quarter results, hitting $301.5 million, up from a year-ago $272.3 million. Net income in the three months, ended June 30, more than tripled, reaching $21.3 million, compared with a year-earlier $6.8 million. Gross margin in the quarter rose to 25 percent from a year-on-year 24.6 percent, due mainly to higher optical gross margin and factory utilization, offset, in part, by product mix. Expenses in the second quarter declined to $38 million, down from a year-over-year $41.5 million. For the six months, revenue climbed 3 percent to $616.5 million from a year-on-year $598.6 million. Net income for the first half nearly doubled, reaching $52.7 million, up from $28.2 million last year.

Kodak Digital Segment Sales Drop
Rochester, N.Y. — Eastman Kodak posted a 9 percent second-quarter decrease in U.S. sales for its digital and film imaging systems segment, down to $896 million from a year-ago $984 million. Total segment sales slid 12 percent in the three months, to $2.2 billion, from $2.4 billion a year earlier, while segment earnings from continuing operations decreased 16 percent year-on-year, to $193 million from $229 million. However, the company recorded a 63 percent increase in second-quarter sales of Easyshare printer docks and related media for home printing and a 25 percent rise in sales of Kodak Picture Maker kiosks. Net worldwide sales of consumer digital capture products — including digital cameras, accessories, memory products and royalties — increased 25 percent in the three months, ended June 30. Net second-quarter U.S. sales edged upward 1 percent, reaching $1.44 billion, up from a year-earlier $1.42 billion. Consolidated second-quarter revenue rose 6 percent, hitting $3.7 billion, up from $3.5 billion the previous year. However, Kodak reported a net loss of $146 million in the second quarter, compared with $136 million in earnings in the same three months in 2004.

Plantronics Revenue Climbs 13%
Santa Cruz, Calif. — Spurred by increasing revenue from wireless headsets for the office and growth of its gaming and computer products group, wireless headset maker Plantronics reported a 13 percent increase in fiscal first-quarter revenue, up to $148.9 million from a year-ago $131.4 million. However, the company recorded lower net income for the quarter, ended June 30, down to $21.7 million, from $22.3 million a year earlier. Gross margin came in at 49.1 percent for the first quarter, down from a year-on-year 53 percent. Three factors contributing to the profit shortfall were lighter contribution from office and contact center revenue; costs incurred to prepare for production ramp on new products; and a return to warranty costs typical of levels a year ago, but higher than recent trends had suggested. Plantronics gaming and computer product group grew 34 percent year-over-year, said the company.


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