Plantronics Reports Lower Sales, Income In Fiscal Q3

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Santa Cruz, Calif. — Plantronics today announced fiscal third-quarter revenues of $215.4 million, down from $222.5 million from the same period last year and net income of $15.2 million, down from $25.0 million in the third quarter of 2005.

Revenues from its Audio Communications Group (ACG) segment grew $15 million or approximately 9 percent, but were more than offset by a $22 million decline in the Audio Entertainment Group (AEG) segment compared with last year's record quarter, both of which ended Dec. 31.

In the ACG segment third-quarter revenues of $176.5 million for ACG were up about 9 percent in comparison with $161.5 million in the year-ago quarter. Wireless headsets led the revenue growth, partially offset by declines in our other product lines.

Sequentially, third-quarter revenues were up 8 percent or $13.5 million with growth coming from all product lines. The largest growth driver was demand for mobile headsets, particularly Bluetooth line, with total mobile revenues up nearly $10 million.

The company reported that its Office and Contact Center (OCC) revenue was up $2.5 million with the increase in wireless office products partially offset by a decline in professional-grade corded headsets. Computer and Gaming product revenues were up 8 percent and Clarity was also up approximately 8 percent.

In the AEG segment third-quarter revenues of $38.9 million for AEG were down about $22 million from a record $61 million in the year-ago December quarter. Compared with the year-ago quarter, portable-product revenues were down 46 percent, and powered-product revenues were down approximately 13 percent. Increased competition and the cumulative reduction of market share in the MP3 accessories market drove the decrease in the portable category.

Sequentially, AEG revenues were up $7 million, or 22 percent, compared with $31.9 million in the September quarter. Growth was driven by the portable line, which was up 34 percent with the powered line up approximately 11 percent.

The combination of low revenues and significant charges for claims related to canceled purchase orders with its suppliers led to non-GAAP gross margin declining sharply sequentially, from 18.5 percent to 10.5 percent. In the year ago quarter, AEG was operating solidly in its operating target model of 30 percent to 35 percent, with a gross margin of 31.3 percent, Plantronics said.


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