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Sonicblue's Sales Surge, Quarterly Loss Shrinks

November 07, 2002|Jon Healey | Times Staff Writer

Buoyed by strong sales of video products, Sonicblue Inc. on Wednesday reported higher revenue and smaller losses for the third quarter despite shrinking margins and the tardy arrival of new devices.

But company executives acknowledged that they have several looming problems that cloud the outlook for next year. These include the potential delisting of Sonicblue's common stock and the large loans that come due next October.

The Santa Clara, Calif.-based maker of digital audio and video devices is trying to renegotiate the nearly $180 million in loans, Chief Financial Officer Marcus K. Smith said, and it has asked the Nasdaq exchange to shift it into the small-cap listings. The move would give the company, which faces delisting on Nov. 18, at least 90 more days to lift its share price above the $1 minimum.

Shares rose 6 cents on Wednesday to 76 cents.

After the markets closed, the company reported a loss of $32.4 million, or 33 cents a share, compared with a loss of $55.3 million in the same quarter last year. Sales rose to $78.4 million, up more than 40% from last year.

More than three-quarters of the sales were in video products, such as DVD-VCR combination units, Smith said. A growing percentage came in products whose profit margins are being narrowed by competition, he said.

The company's gross margins for the quarter stood at only 7%, in part because a new line of portable digital audio players didn't arrive until late September, Smith said. The problems at the West Coast ports contributed to that delay, but Chief Executive L. Gregory Ballard said the main cause was the company waiting too long to do product development.

Ballard said retailers are demanding more of the company's ReplayTV digital video recorders than its manufacturers can supply. Sonicblue realizes only a fraction of revenue from those sales immediately, however, so they've had no meaningful effect on the company's bottom line, he said.

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