Telephonics Reports Results for Quarter and 9 Months Ending
Boston, October 22, 1996
- Zoom Telephonics, Inc. (NASDAQ: ZOOM),
a leading manufacturer of faxmodems and other personal computer
communications products, today announced sales for its third
quarter ending September 30, 1996 of $20.0 million, down 15%
from $23.5 million in the third quarter of 1995, primarily
due to lower average faxmodem selling prices. Sales for the
first nine months of 1996 grew 22% to $74.4 million from $61.0
million in the first nine months of 1995, primarily due to
unit volume increases for V.34 faxmodems.
1996 net income of $253 thousand or $.03 per share was down
from $1.54 million or $.25 per share in the third quarter
of 1995, primarily due to lower sales and gross margin. Net
income for the first nine months of 1996 of $2.72 million
or $.38 per share was down from $3.75 million or $ .62 per
share for the first nine months of 1995, primarily due to
lower gross margin.
Sales of branded Zoom products
in North America continued to account for the majority of
sales, in spite of significant gains in other markets. Worldwide
OEM sales were 19% of Zoom's sales in the third quarter of
1996, up from 9% in the third quarter of 1995. Zoom-brand
sales outside North America were 16% of sales in the third
quarter of 1996, equal to the third quarter of 1995.
Gross margin declined to 19.4% in the third quarter of 1996
from 25.7% in the third quarter of 1995, reflecting an increase
in lower-margin OEM sales and increased price competition.
These factors also affected the first nine months of 1996,
as gross margin dropped from 24.9% to 20.7%.
acquisition of Tribe Computer Products on June 24, 1996 reduced
third quarter 1996 net income by 2 cents per share. Only $262
thousand in Tribe products were shipped in the third quarter,
as Zoom worked to cost-reduce Tribe products and integrate
them into Zoom's production. Zoom expects that production
of Tribe products will be fully integrated in the fourth quarter
of 1996. Zoom expects to close the Tribe Alameda office in
late November 1996, and to move Tribe activities to Boston
at that time.
Zoom's operating expenses for the third
quarter of 1996 rose to $3,838,000 or 19.2% of sales from
$3,627,000 or 15.4% in the third quarter of 1995, as non-Tribe
expenses declined slightly but increased as a percentage of
sales. Research and Development expense rose to $715,000 or
3.6% of sales from $447,000 or 1.9% of sales, primarily due
to increased personnel costs. Sales and Marketing expenses
decreased to $2,199,000 from $2,442,000 but rose in percentage
terms to 11% from 10.4%, reflecting increased OEM sales and
the importance of variable selling expenses. General and Administrative
expenses increased to $924,000 or 4.6% of sales from $738,000
or 3.1%, primarily reflecting increased personnel costs.
"We expected a tough quarter, and we got what we expected,"
said Frank Manning, Zoom's President. "Pricing dropped
abruptly late in the second quarter. The rate of decline slowed
considerably during the third quarter, but we had to live
with lower prices. We do hope for some future gross margin
improvement due to lower product costs and the introduction
of certain new higher-margin products. Unit volume remains
fairly strong, and we recently began a relationship with an
important PC manufacturer. In addition, we recently began
shipping to CompUSA, and we're extremely pleased about this
opportunity. ComStarTM SVD began shipping during the last
week of September, and there appears to be strong demand for
this product, which includes a 33.6 Kbps faxmodem, voice mail,
full-duplex speakerphone, AudioSpanTM simultaneous voice and
data, and our new ZoomLinkTM CD-ROM. We have begun shipping
a number of new Zoom Business Products to go with the Zoom/MultiLine.
And we're close to shipping three more new products in the
USA, including the Zoom/FaxModem 33.6 SVD low-cost AudioSpan
product, the ComStar XT SVD external version of our internal
Comstar SVD, and our new line of internal ISDN products. Internationally
we continue to expand our product line and the number of countries
where we're selling products. We have a strong product line
now, and believe that we're well-positioned to take advantage
of expected growth from 56 Kbps modems, 128 Kbps ISDN products,
and even higher speed solutions in years to come."
Zoom's balance sheet remained strong, with a current ratio
of 8.0. The company ended the quarter with $12.6 million in
cash and shareholders' equity of $6.33 per share.
For additional information, please contact Investor Relations,
Zoom Telephonics, 207 South Street, Boston, Massachusetts
02111, telephone (617) 423-1072, fax (617) 338-5015, E-mail
Zoom's World Wide Web site is www.zoomtel.com
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