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Zoom Telephonics Reports Results
for Second Quarter Ending 6/30/99 Boston,
July 23, 1999 - Zoom Telephonics, Inc. (NASDAQ: ZOOM),
a leading manufacturer of faxmodems and other data communications
products, today reported a net loss for the second quarter
of 1999 of $719 thousand or $.10 per share, versus a net loss
of $1.6 million or $.21 per share for the second quarter of
1998. Zoom reported sales of $15.8 million for its second
quarter ending June 30, 1999, up 30 % from $12.2 million for
the second quarter of 1998. Compared to the second
quarter of 1998, Zoom's sales increase was caused by a 49%
increase in modem unit volume partially offset by a 20% decline
in average selling prices. Sales of 56K modem units rose significantly,
outweighing the decline in 33.6K/28.8K modem sales.
Zoom ended the quarter with a strong balance sheet, with cash
and marketable securities of $9.9 million or $1.32 per share,
and stockholders' equity of $4.95 per share. On April
7, 1999 Zoom Telephonics announced the acquisition of most
of the modem assets of Hayes Corporation for $5.3 million
in cash. The purchase included the Hayes, Practical Peripherals,
Accura, Optima, Ultra, Smartmodem, Century 2, and Cardinal
brands and product rights for the USA, Canada, South &
Central America, Europe, and the Middle East. The $5.3 million
cash payment is reflected in the $9.9 million cash position
at 6/30/99. In July 1999 Zoom finalized the purchase of some
of the remaining Hayes assets, including Hayes Asia Pacific,
for an additional $1.1 million. With the purchase of Hayes
Asia Pacific, Zoom now owns the worldwide rights to the Hayes
name and the brands listed above. Zoom plans to set up a sales
office in Beijing, China in the third quarter of 1999.
Approximately 10% of Zoom's reported sales of $15.8 million
for the second quarter of 1999 were Hayes product sales. Hayes
had shut down its manufacturing prior to the Zoom purchase
of the Hayes assets. The production of key Hayes products
was restarted by Zoom in the second quarter of 1999 for European
delivery, and very late in the second quarter for sales in
the U.S. Zoom's net loss for the second quarter of
1999 of $719 thousand versus a net loss of $1.6 million for
the second quarter of 1998 benefited from a strong gross margin
improvement resulting from advantageously negotiated purchases
of modem materials and reduced channel price protection and
customer rebates. Expenses increased significantly for the
same time period as a result of the newly acquired Hayes U.K.
organization, increased R&D investment for future broadband
products, Hayes goodwill amortization, and increased market
development spending for both the Zoom and Hayes brands.
"The Hayes purchase comes at an opportune time for Zoom,"
said Frank Manning, Zoom's President and CEO. "The strong
Hayes brand and products should help Zoom gain market share
in the difficult modem market. This should enhance our position
in the retail, distributor and VAR channels, which we plan
to leverage for sales of DSL and cable modems. We believe
that Zoom's technology, brands and market channels will give
us a strong competitive position." 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 address Investor@zoom.com.
Zoom's World Wide Web site is www.zoom.com.
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