Symbol Posts 2Q Profit

mobile computing wireless infrastructure

For its second quarter ended June 30, 2004, the Holtsville, N.Y.-based mobile products vendor reported earnings of $28.8 million, or 12 cents per share, on sales of $432.8 million. That compares with earnings of $6.6 million, or 3 cents per share, on sales of $373.8 million for the same quarter last year.

The results beat analysts' expectations of 10 cents per share, according to First Call Thomson Financial. Shares of Symbol closed the day trading down 18 cents, at $12.30 per share, just prior to the release of the earnings results.

Sales of new Symbol products, including the Symbol MC9000 core mobile computer and the Symbol LS2200 handheld laser bar code scanner increased by about 50 percent over the first quarter 2004, according to Symbol.

While sales from Symbol's advanced data capture products increased 27 percent over last year's second-quarter bookings, they declined sequentially when compared to last quarter.

Service revenue for the quarter came in at $76.2 million, a 9 percent decline when compared with the same period last year. Gross profit for the second quarter is recorded as $196.7 million, representing a 29 percent growth over the same quarter last year.

Also during the quarter, Symbol reported $40 million paid toward the settlement with the U.S. Attorney's Office and the SEC as part of penalties to settle charges of accounting fraud that took place at the company from about 1998 until 2003.

Symbol in June agreed to pay a total of about $138 to settle the accounting fraud charges. That figure includes SEC and U.S. Attorney agreements for Symbol to pay a $37 million penalty, payable to a restitution fund for Symbol investors, and $3 million to the U.S. Postal Inspection Service Consumer Fraud Fund. It also includes a settlement of private shareholder litigation, subject to court approval, of $98 million, composed of $1.75 million in cash and $96.25 million in stock.

As the company continues its work to move beyond the scandal, Symbol's this week said it would acquire Matrics, a Rockville, Md.-based RFID product vendor, in a $230 million cash deal. The move marks Symbol's second acquisition in about a month. In mid-June, Symbol agreed to acquire Trio Security, a Colorado Springs, Colo.-based handheld security vendor.

Symbol expects to close the deal, which is subject to approval under the Hart-Scott-Rodino Antitrust Improvements Act, during the third quarter. With the acquisition, Symbol expects dilution to its 2004 earnings per share of recurring operations of Matrics, including costs to finance the transaction, to be 5 cents to 6 cents per diluted share.

Symbol said it expects third quarter 2004 revenue to be in the range of $435 to $445 million.