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Zoom Telephonics Reports Results
for the Third Quarter Ending 9/30/00

Boston, October 26th, 2000 - Zoom Telephonics, Inc. (NASDAQ: ZOOM), a leading manufacturer of modems and other data communications products, today reported sales for its third quarter ending September 30, 2000 of $16.5 million, down 9% from Q3 1999 and up 25% from Q2 2000. Zoom reported a net loss of $50 thousand, or $.01 per share, for Q3 2000, versus net income of $95 thousand or $.01 per share for Q3 1999.

"The Zoom sales area with the highest growth from Q3 1999 to Q3 2000 was OEM Sales, covering sales to Original Equipment Manufacturers worldwide, which went from $700 thousand to $1.5 million," said Frank Manning, Zoom's President and CEO. "North American non-OEM sales were up slightly to $12.7 million due to a significant market share gain in an overall smaller market. International non-OEM sales had the biggest drop, from $5.0 million to $2.3 million, primarily due to weak sales in Europe. We have restructured our international sales group, and hope to see significant improvement in quarters to come."

"PC Data tracks a number of computer products retailers in the USA. They report that from September 1999 to September 2000 our Zoom(R) brand's share of overall dial-up modem revenues went from 8.1% to 11.2%, and that our Hayes(R) brand's share went from 0% to .7%. Unfortunately PC Data shows overall modem sales dollars in the stores they track dropping from $24.5 million in September 1999 to $20.5 million in September 2000 even though unit sales grew from 291,663 to 318,129. However, we believe that our increased market share will be a significant advantage to us in future years as V.92 dial-up modems and broadband modems re-energize the retail channel's sales of Internet access products."

Zoom ended Q3 2000 with a strong balance sheet, with a current ratio of 4.9, cash and investment securities of $5.1 million or $0.66 per share, and stockholders' equity of $4.81 per share.

"Our balance sheet clearly demonstrates the effect of our entry into the cable and DSL modem markets," said Frank Manning. "We have increased inventory in an effort to be a major supplier of broadband products. The opportunities are big, but so are the challenges, including long lead-times for components, long product qualification times, and sales opportunities concentrated in a relatively small number of very large accounts. Zoom has been quite successful in developing broadband products, as demonstrated by our CableLabs approvals, recent PCI cable modem Windows Hardware Qualification Labs approval, and the start of DSL modem shipments. Now we need to translate that product development success into sales success. Because selling this type of product is new to us, it's hard to predict exactly when we will see substantial shipments of broadband products. Meanwhile we are expanding our contacts and getting our products evaluated by a who's who of important potential customers, andpursuing an aggressive production schedule that should position us to fulfill demand when it comes."

Zoom has scheduled a Q3 2000 earnings conference call for Thursday, October 26 at 8:45AM Eastern Time. The call will be simulcast to stock analysts and other interested parties on Zoom's website (www.zoomtel.com/Q3) and numerous leading financial and investor-oriented websites via the CCBN / BusinessWire StreetEvents network. Shortly after the conference call, a recorded broadcast will be available on Zoom's website and on the StreetEvents network.

For additional information, please contact:

Investor Relations,
Zoom Telephonics
207 South Street
Boston, Massachusetts 02111
Telephone: (617) 423-1072
e-mail address: investor@zoomtel.com.
Zoom's World Wide Web site is www.zoomtel.com

This release contains forward-looking information relating to Zoom's plans, expectations and intentions, including statements relating to Zoom's ability to increase its international sales, Zoom's ability to exploit the growing market for internet access products through its increased market share in the modem market, and Zoom's ability to become a significant supplier in the cable and DSL modem markets. Actual results may be materially different than those expectations as a result of known and unknown risks, including: uncertainty of new product development and introduction, including budget overruns, project delays and the risk that newly introduced products may contain undetected errors or defects or otherwise not perform as anticipated and other delays in shipments of products; uncertainties inherent in financial projections that, by their nature, are based upon assumptions, many of which are not in the control of the company; Zoom's dependence on one or a limited number of suppliers for certain key components; early stage of development of the cable and DSL data communications markets, and uncertainty of market growth of those markets; rapid technological change; competition; and other risks set forth in Zoom's filings with the Securities and Exchange Commission. Zoom cautions readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Zoom expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change in the Zoom's expectations or any change in events, conditions or circumstance on which any such statement is based.

 

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