Lexar Reports Third Quarter Results Thursday October 14, 4:15 pm ET Revenues and Gross Margins Increase Sequentially Net Loss Narrows as Planned
FREMONT, Calif.--(BUSINESS WIRE)--Oct. 14, 2004--Lexar Media, Inc. (Nasdaq:LEXR - News), a leading manufacturer and marketer of high-performance digital media and accessories, today reported financial results for the third quarter ended September 30, 2004. Total third quarter revenues of $165.2 million increased 67% from $98.7 million in the same period last year and increased 1% sequentially from $163.2 million in the preceding quarter. Product revenues of $164.1 million increased 74% from $94.3 million in the same period last year and increased 1% from $162.1 million in the preceding quarter. The Company reported a net loss of $3.5 million, or $(0.04) per diluted share, as compared to net income of $9.7 million, or $0.12 per diluted share, in the same period last year and a net loss of $18.1 million, or $(0.23) per diluted share, in the second quarter of 2004.
"Lexar's bottom-line results improved sequentially despite a higher than expected decline in average selling price per megabyte during the quarter," said Eric Stang, chairman, CEO and president, Lexar. "As anticipated, product gross margins improved as we benefited from cost reductions in flash memory from existing as well as new suppliers. Use of cash during the quarter reflects typical inventory builds as we gear up for the holiday season. We are excited about the rollout of our KODAK branded products, which are expected to account for more than 10% of our fourth quarter revenues, as well as our many recently announced new products, which will also be available in the fourth quarter."
Corporate Highlights
Lexar recently:
Announced the opening of a sales and marketing office in Hong Kong, the company's first regional office dedicated to expanding its business in Greater China, and named Jebsen & Co. Ltd. as distributor of the full line of Lexar products in the region. Introduced KODAK xD-Picture Cards that Lexar will distribute and market through both Lexar and Kodak's global retail distribution channels beginning in the fourth quarter of 2004. Introduced JumpDrive® TouchGuard(TM), a USB flash drive with an integrated biometric fingerprint sensor to authenticate a user's identity and provide easy access to secured files and password protected web sites. Showcased its full line of reduced-size flash memory cards dedicated to mobile digital devices, providing retailers and distributors with a line of popular reduced-size form factors to meet their mobile-oriented memory card needs with one trusted supplier. Introduced the ActiveMemory(TM) System, a technology designed to optimize digital photography workflow to achieve enhanced productivity in and out of the photo studio. At the center of this offering are ActiveMemory-enabled Professional CompactFlash(TM) cards that can store user preferences and host device settings in a protected area on the card. Introduced two new Professional CompactFlash Readers designed with an innovative stackable design for concurrent downloads and capable of supporting Lexar's ActiveMemory System, addressing professional photographers' needs for almost instantaneous data transfer and improved project workflow. Revealed plans to incorporate encryption technology into its Professional CompactFlash which, in conjunction with technology-compatible digital cameras, will provide users with a secure digital media solution. Nikon will be the first camera company to incorporate the new security technology into its D2X digital camera. Expanded the compatibility of its line of USB 2.0 multi-card readers to include Reduced-Size MultiMediaCard (RS-MMC), Mini Secure Digital (miniSD) and Memory Stick Duo flash memory card formats. Financial Outlook
Mr. Stang continued, "Many indicators point to another seasonally strong fourth quarter, underpinned by continued healthy demand primarily for digital cameras, USB flash drives and MP3 players. We expect that our product gross margins will improve modestly in the fourth quarter as we anticipate dramatic price reductions at retail, offset by improvements in flash memory pricing. As a result, we expect fourth quarter revenues to be $230 million or more, and we expect to return to profitability with fully diluted earnings per share in a range of $0.01 to $0.04."
Conference Call
The Company will host a conference call to discuss its financial results and outlook today at 2:00 p.m. PST (5:00 p.m. EST). To participate on the live call, analysts and investors should dial 800-218-0713 at least ten minutes prior to the call. The call will also be webcast and can be accessed from Lexar's investor relations' web site at http://www.lexar.com/ir/ where an archive of the conference call will be available for one year.
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