MORGAN HILL, Calif., July 19, 2001 (PRIMEZONE) -- Cidco, Inc. (Nasdaq:CDCO) today announced financial results for the second quarter ended June 30, 2001. Sales from continuing operations, representing retail sales of e-mail appliances and subscription revenues from e-mail service, were $5.6 million compared to $4.8 million in the first quarter of 2001 and $699,000 during the second quarter last year. Not included in the year-ago sales comparison is a one-time OEM sale of $5.9 million to a single customer. The Company reported a loss for the quarter from continuing operations of $6.4 million, or $0.45 per basic and diluted share, compared to a loss of $11.5 million, or $0.82 per basic and diluted share in the first quarter of 2001 and income of $10.4 million, or $0.72 per diluted share ($0.75 per basic share) for the same period in 2000. Included in last year's second quarter income was other income of $15.4 million related to the completion of Cisco Systems, Inc.'s purchase of InfoGear Technology. Financial results from continuing operations represent the activities of the Company's Internet appliance business.
"We are highly encouraged with our progress on several fronts, including our goal of reaching positive cash flow in the first quarter of next year and breakeven during the second quarter of 2002," said Paul Locklin, president and chief executive officer. "The major reason for our continuing optimism is that each quarter seems to validate the business model we embarked on when we began concentrating strictly on the Internet appliance business late last year. One of the main tenets of our business model is the creation of high margin recurring revenue, I'm pleased to report that our margins from ongoing service revenue are even greater than we had projected, a major factor in our significant gross margin improvement. This is a trend we expect to continue."
The Company also reported improvements in operating expenses. Second quarter expenses declined to $7.6 million from $11.5 million in the first quarter this year and from $17.6 million in the fourth quarter of 2000. Included in second quarter expenses were $1.0 million in one-time unbudgeted accounting, legal and reporting costs related to the resolution of the accounting issue reported previously.
Cidco added 19,300 subscribers during the quarter ending with approximately 115,000 paying subscribers versus 17,400 paying subscribers a year ago. Subscriber growth during the quarter was particularly good in light of the Company's limited advertising and a challenging retail environment.
For the six months ended June 30, sales from continuing operations were $10.4 million, compared to $7.3 million for the same period in 2000, which included $6.3 million in OEM sales. For the six months, the Company reported a loss from continuing operations of $17.8 million, or $1.27 per basic and diluted share, compared to income of $5.6 million, or $.40 per basic and diluted share, for the year-ago period, which included the $15.4 million gain from the sale of InfoGear.
"Our new product development efforts continued on schedule during the quarter and our Mivo 250 and 300 products will see market introduction in the third quarter," Locklin said. "We and our retail channel continue to be excited about the potential for these cordless products which we will be introducing just in time for the holiday buying season. In addition, we are planning on introducing a new service in October that will allow current Internet users to send and receive e-mail from their existing e-mail accounts on Cidco MailStation and Mivo products. This new service will greatly expand our market opportunity, as we will now have a compelling service offering for the 57 million homes with Internet access.
"We're optimistic about the second half of the year," said Locklin. "We expect continued improvement in margins and expenses while demand increases as we enter our best selling season with an expanded line of exciting products and services, which we believe will result in substantial subscriber growth by yearend and the first quarter next year. We're continuing to explore potential strategic alliances and alternatives that can further expand our potential."
Conference Call Information
The Company's earnings conference call will be Thursday, July 19, at 5 p.m. EDT (2 p.m. PDT). Following a brief presentation, participants will have the opportunity to ask questions. To participate in the call, dial 1-800-852-8968 ten minutes before the conference call begins and ask for the CIDCO conference. A replay will be available shortly after the conclusion of the call until July 26, 2001. To access the replay, dial 1-888-642-1687 using pass code 1400832.
There will also be a real-time audio webcast of the conference call at the Company's Web site, www.cidco.com, by StreetFusion. To listen to the live call, select StreetFusion at least 15 minutes before the start of the call to register, download and install any necessary audio software. Individuals accessing the audio webcast will be "listen only" and will not have the capability to take part in the Q&A session.
An Internet replay will be available at the conclusion of the call. Interested individuals can access the webcast replay at www.cidco.com by pressing the StreetFusion icon.
About Cidco
Cidco, Inc. is a worldwide leader in personal Internet communications products and services that enable consumers to communicate simply and easily over the Internet. Cidco introduced its first Internet appliance in 1998, and now provides a family of portable, affordable, easy-to-use devices that make e-mail and other Internet-based information readily available to consumers. The company is headquartered in Morgan Hill, Calif., at the south end of Silicon Valley. For additional information, visit www.CIDCO.com or call (408) 779-1162.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:
This news release contains forward-looking statements or predictions. In many cases, forward-looking statements can be identified by terminology such as "may," "intends," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential" or "continue," or the negative of these terms and other comparable terminology. These statements are only predictions. These statements represent our judgment as of this date and are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed in such forward-looking statements. Potential risks and uncertainties include, without limitation, risks associated with economic conditions both domestic and international in the Internet and Internet appliance industry, failure to maintain a national retail distribution channel, failure to obtain subscriber growth, failure to create demand by sufficient advertising spending, failure to introduce new products and services, competitive factors, lower than expected consumer product acceptance, technological and business difficulties, government regulations, delays or other problems with product development, and risks related to financial resource constraint and/or the ability to obtain required financing. These and other factors are discussed in more depth in Cidco, Inc. filings with the SEC, copies of which may be accessed through the SEC's World Wide Web site at http://www.sec.gov. CIDCO is under no obligation (and expressly disclaims any such obligation) to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.
MailStation, MIVO and CIDCO are trademarks of CIDCO Incorporated. All other trademarks are the property of their respective owners.
CIDCO, Inc. Q2 2001 Results
Statement of Operations
(in thousands, except per share data)
Three months ended Six months ended
June 30, June 30,
----------------- -------------------
2001 2000 2001 2000
------- ------- -------- --------
Sales:
Service $ 3,518 $ 291 $ 6,147 $ 428
Hardware 2,090 408 4,299 532
OEM -- 5,898 -- 6,303
------- ------- -------- --------
Total sales 5,608 6,597 10,446 7,263
Cost of sales 4,961 4,674 10,540 6,014
------- ------- -------- --------
Gross margin 647 1,923 (94) 1,249
Operating expenses:
Research and development 1,181 582 2,863 1,250
Selling and marketing 4,251 5,669 12,455 8,197
General and administrative 2,134 1,022 3,699 2,138
------- ------- -------- --------
Total operating expenses 7,566 7,273 19,017 11,585
------- ------- -------- --------
Loss from operations (6,919) (5,350) (19,111) (10,336)
Other income, net 568 15,701 1,298 15,917
------- ------- -------- --------
Income (Loss) before
income taxes (6,351) 10,351 (17,813) 5,581
Provision for income taxes -- -- -- --
------- ------- -------- --------
Income (Loss) from
continuing operations (6,351) 10,351 (17,813) 5,581
Loss from discontinued
operations -- (296) -- (8,127)
------- ======= ======== ========
Net income (loss) $(6,351) $10,055 $(17,813) $ (2,546)
------- ======= ======== ========
Net income (loss)
per share - basic:
Continuing operations $ (0.45) $ 0.75 $ (1.27) $ 0.40
Discontinued operations -- (0.02) -- (0.59)
------- ------- -------- --------
Net income (loss) $ (0.45) $ 0.73 $ (1.27) $ (0.19)
------- ======= ======== ========
Net income (loss)
per share - diluted:
Continuing operations $ (0.45) $ 0.72 $ (1.27) $ 0.40
Discontinued operations -- (0.02) -- (0.59)
------- ------- -------- --------
Net income (loss) $ (0.45) $ 0.70 $ (1.27) $ (0.19)
------- ======= ======== ========
Shares used in per-share
calculation - basic 13,982 13,873 13,976 13,842
Shares used in per-share
calculation - diluted 13,982 14,302 13,976 13,842
Condensed Balance sheet
(in thousands)
June 30, Dec 31,
2001 2000
------- -------
Assets:
Cash and marketable securities $ 7,742 $24,800
Net accounts receivable 4,513 15,883
Net inventories 9,748 12,394
Other current assets 11,356 14,567
Long-term assets 2,989 3,398
------- -------
Total assets $36,348 $71,042
======= =======
Liabilities and stockholders' equity:
Current liabilities $22,600 $39,562
Stockholders' equity 13,748 31,480
------- -------
Total liabilities and
stockholders' equity $36,348 $71,042
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