SUNNYVALE, Calif., July 31 /PRNewswire-FirstCall/ --
General Magic, Inc. (Nasdaq: GMGC), a pioneer in voice application software
and services, today announced operating results for the second quarter ended
June 30, 2002.
Revenue for the second quarter ended June 30, 2002, was $2.1 million,
compared with $2.5 million reported in the first quarter of 2002 and with $1.0
million reported in the second quarter of 2001.
Net loss applicable to common shareholders for the second quarter of 2002
was $5.4 million or a loss of $0.04 per diluted share, compared with $5.3
million or a loss of $0.06 per diluted share in the first quarter of 2002 and
with $7.8 million or a loss of $0.11 per diluted share in the second quarter a
year ago. At June 30, 2002, there were 127.3 million shares of common stock
outstanding.
Operating expenses for the second quarter were $7.9 million, including a
restructuring charge of approximately $513,000. This compares with $7.7
million in the first quarter of 2002 and with $8.9 million for the second
quarter of 2001. Cash and short-term investments totaled $6.5 million as of
June 30, 2002, compared with $12.1 million at March 31, 2002. The second
quarter cash burn was $5.5 million.
Management Qualitative Comments
"The second quarter was a mixed quarter for General Magic," said Kathie
Layton, president and chief executive officer. "Revenue came in lower than we
expected, due primarily to difficult market conditions and tight controls on
IT spending, resulting in a more complex decision process and longer sales
cycles.
"We have responded to the current climate by taking the appropriate
measures to expedite our sales process and bring our expenses down. As we
announced earlier this month, we are accelerating our strategy to partner with
top companies in our space in order to extend our sales capabilities, shorten
the sales cycle and offer a more complete solution. We have embarked on this
path with our partnership with IntervoiceBrite, announced in April, and with
our more recent partnership announcement with Voice Genie.
"We have also taken significant cost-cutting measures, including a
reduction in our workforce and compensation reductions for our senior level
management.
"We were pleased to be able to announce our new one-year contract with
OnStar, a wholly owned subsidiary of General Motors, valued at $2.4 million.
This new contract is in addition to our hosting agreement and extends the
prior agreement to develop and maintain the Virtual Advisor. Under the new
contract, General Magic will be working with OnStar to transition the Virtual
Advisor to J2EE and the magicTalk Enterprise Platform. This is an important
proof point for our strategy. OnStar will now have a site license to the
magicTalk Enterprise Platform, opening up opportunities for adoption for
General Magic software in other OnStar applications.
"While the revenue value of the contract is lower than our previous
contract, we were able to achieve an increase in rates, which is expected to
make the contract more profitable for General Magic. Furthermore, in order to
bring our current staffing for OnStar in line with the expected revenue level
and reduced support requirements, we have reduced the size of our team
dedicated to OnStar by approximately 60 percent. We believe that the new
agreement with OnStar represents a very positive step for both our companies.
"Finally, the completion of our reverse split not only brings us closer to
compliance with Nasdaq listing requirements, it also allows us to make
significant progress in our efforts to secure funding. We currently have a
non-binding term sheet under negotiation and, while the outcome is uncertain,
we hope to announce something shortly."
Guidance
The following guidance for the third quarter is based on the company's
current beliefs and expectations.
-- Revenue in the third quarter of 2002 is anticipated to be in the range
of $1.4 to $2.2 million.
-- Cost of revenues and operating expenses for the third quarter of 2002
are expected to be between $6.4 and $7.0 million. Included in this
projection is approximately $600,000 in depreciation and amortization
expense. This reduction in expenses reflects much of the cost-cutting
measures announced earlier in the quarter.
-- Net cash burn prior to any financings is expected to be between $3.8
and $4.1 million for the third quarter of 2002. This includes
severance payments of approximately $400,000.
Conference Call Information
General Magic will be holding a conference call to discuss these results
today, Wednesday, July 31, 2002 at 1:30 p.m. PDT. The live call-in telephone
number is 415-228-4943, passcode "General Magic." A replay will be available
by calling 402-998-1283. A webcast of the call will be available through the
investor relations portion of the company's website at www.generalmagic.com.
About General Magic
General Magic is a leading voice infrastructure software company that
provides enterprise-class software and supporting voice dialog design and
hosting services that enable companies to quickly and efficiently provide
anytime, anywhere access to information and services over the telephone.
General Magic's VoiceXML & J2EE(TM)-based solutions enable enterprises to
easily integrate voice access into enterprise applications using a broad
selection of speech recognition technologies and telephony interfaces. These
solutions make voice a strategic tool in helping businesses improve the
customer experience, reduce transaction costs, and provide high quality, voice
branded access to content and services. General Magic is headquartered in
Sunnyvale, Calif. For additional information, visit www.generalmagic.com.
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