SANTA CRUZ—The strong dollar and several other factors hampered sales in the first quarter of fiscal 2016, Plantronics executives reported Monday.
Compared to a year ago, revenues were down slightly, profits dropped by 4.8 percent and earnings per share declined 14.1 percent. First quarter revenue and earnings were inline with the company’s previous guidance.
“Fiscal 2016 is being impacted by a number of factors with the most significant being currency,” said Ken Kannappan, president and chief executive officer of the Santa Cruz headset maker. Even if exchange rates stay the same, the company expects its numbers to fall below its previous long-term forecast of 10 percent. “However, we continue to believe our long-term top line growth opportunity is 10 percent.”
Kannappan and Pam Strayer, Plantronics chief financial officer, commented on the company’s quarter and prospects on a webcast conference call Monday with analysts and investors.
Strayer said the strengthening dollar decreased the company’s revenues by about $11 million. While some of that was recaptured in a hedge program, the actual loss is not quantifiable.
“What these metrics don’t capture is the impact we had from additional pricing pressure, discounted or lost business in locations where we sell in U.S dollar outside the U.S.” Strayer said.
If the dollar had not strengthened, the company’s revenue would’ve been flat or slightly up, Kannappan said.
There were, however, also continued delays in product releases and an unexpectedly steep drop in sales of wireless mono headsets as consumers migrated to stereo headsets. Consumer net revenues dropped by nearly $10 million to $54.6 million in the first quarter, compared to a year ago, primarily due to the decline in mono Bluetooth products.
Unified communications continued to grow but at a slower pace than it has historically partly because Microsoft rolled out a new Skype communications product earlier this year causing some potential buyers to delay related purchasing decisions. The bankruptcy of Radio Shack, the decline of the Russian ruble and weaker economic conditions in the energy sector also had some impact on the company’s sales, according to Kannappan.
Despite the challenges, the company managed to grow overall market share in the U.S. from 51 percent to 58 percent this year and buy back 5 million company shares.
The company’s key drivers going forward will continue to be products relating to the emerging field of unified communications — the term for a category of technology that supports seamless communication regardless of platforms, operating systems and devices — and wireless stereo or Bluetooth headsets.
The company has announced new integrated headset products described as the first in their class to address particular sets of issues such as simplicity and the ability to help curb distraction in open offices.
AT A GLANCE
WHAT: A publicly held audio communications headset manufacturer for businesses and consumers.
HEADQUARTERS: 345 Encinal St., Santa Cruz, CA 95060.
BACKGROUND: Founded in 1961, Plantronics introduced the first lightweight communications headset in 1962.
LEADERSHIP: Ken Kannappan, president and chief executive officer.
EMPLOYEES: Last quarter the company reported a total headcount of 3,447 people worldwide, including about 540 in Santa Cruz. More than 2,000 people work at the company’s manufacturing facility in Tijuana, Mexico.
INFORMATION: 831-426-5858; http://www.plantronics.com.
STOCK PRICE: Shares trading on the NYSE under the ticker PLT closed Tuesday at $57.18 up $1.08. The 52-week range is $42.65–$58.66.
FINANCIALS: First quarter 2016 net revenues were $206.4 million compared with $216.7 million a year ago. Net income was $21.23 million, or 67 cents per diluted share, compared to $28.67 million, or 78 cents per diluted share, a year ago. Cash, cash equivalents and investments grew to $683 million by the quarter-end.
DIVIDEND: The company announced a quarterly dividend of 15 cents per share to be paid Sept. 10 to all shareholders of record on Aug. 20.
GUIDANCE: The company expects revenues of $202 million to $212 million and diluted earnings per share of 39-47 cents for the second quarter of 2016, which ends in September.
This article first appeared in the Santa Cruz Sentinel.