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Harman Raises OEM Sales Sites

New York — Harman International intends to boost consumer electronics sales during the next five fiscal years, but they will account for a shrinking portion of overall sales as the company sharpens its focus on the automotive OEM market, executives said during an investors’ conference.

Harman’s OEM business, which includes some OEM speaker sales to PC makers, is ‘more profitable’ and ‘uses less cash ‘ than Harman’s consumer and pro audio businesses, said CEO Bernard Girod. ‘We shrank the consumer business 30 percent in the last five years’ as the group focused on improving margins, he noted.

In FY’ 02, ending next June 30, Harman projects worldwide sales of $1.9 billion, with 20 percent of revenue in consumer, 55 percent in OEM, and 25% in pro. In fiscal 2006, Harman plans for consumer’s share to drop to 15 percent while OEM’s share rises to 65 percent.

Based on the supplied numbers, consumers sales will nonetheless grow from $380 million in FY ’02 to $450 million in FY’06. One factor that could contribute to consumer growth is Harman’s planned U.S. entry into the aftermarket telematics market. Its Online Pro is a CD head unit equipped with GPS and GSM-wireless transceiver that, among other things, verbally gives driving directions using CD-ROM maps, reads email and SMS messages sent over a GSM wireless network, and offers hands-free phone calling. The product is available from Harman Becker in the European aftermarket, but U.S. branding plans haven’t been announced.

Harman’s OEM growth will be fueled in part by the launch of a 20Mbps OEM fiber-optic car-network adopted by BMW, Mercedes Benz, Audi, and Porsche. It’s already in 2002 7 series BMWs worldwide. The system, which will be upgraded to 200Mbps in the next generation, is under consideration as one of the candidates for adoption by the SAE for its high-speed network standard. Harman also plans to migrate the technology to the home market.