SCM Microsystems Announces Preliminary Results for Its Second Quarter
July 09 2004 - 3:30AM
PR Newswire (US)
SCM Microsystems Announces Preliminary Results for Its Second
Quarter FREMONT, Calif., July 9 /PRNewswire-FirstCall/ -- SCM
Microsystems, Inc. (Nasdaq: SCMM; Prime Standard: SMY), a leading
provider of solutions that open the Digital World, today announced
preliminary revenue and gross margin results for its second quarter
ended June 30, 2004. Revenue for the second quarter is expected to
be approximately $11.5 million, which is below management's
previously reported expectation of $13 million to $15 million. The
shortfall primarily is due to lower than expected sales of the
Company's digital TV products, which are used to provide secure
access to digital broadcast content. European customer demand for
the Company's traditional digital TV security modules decreased
more rapidly than the Company had anticipated, primarily as a
result of continued aggressive competition in this market from
non-licensed products. In addition, the Company experienced delays
in launching and deploying new digital TV security products, which
had been expected to generate significant revenue in the second
quarter. The Company also intends to write down approximately $2.5
million to $3.0 million of component and finished goods inventory
related to its digital TV products, which is expected to result in
significantly reduced gross margin for the second quarter, versus
the previously-reported expectation of 40% to 42%. The majority of
this write down relates to the Company's traditional digital TV
security products, which, primarily due to an increasingly
difficult competitive environment, the Company now doubts it will
be able to sell. The remainder relates to finished inventory of a
custom digital TV security module that the Company now also doubts
it will be able to sell. The Company's management and Board of
Directors are evaluating alternatives to bring the Company's
revenues and expenses into alignment. Management will provide an
update on these strategies as well as complete financial results
for the Company's second quarter on August 5, 2004. The Company
also announced that it has received a demand letter from a
significant European customer that claims damages resulting from
the performance of one of the Company's products. It is possible
that this demand letter may result in legal action against the
Company. Although the outcome of any such legal action cannot be
determined at this time, the Company believes it has strong
defenses against the claims made in the demand letter and intends
to vigorously defend itself in any legal action arising from such
claims. However, if legal action were to be taken, and if such
legal action were to result in a judgment adverse to the Company,
the outcome of such a judgment could have a material adverse effect
on the Company's operating results. August 5, 2004 Conference Call
SCM will hold a conference call and webcast on August 5, 2004 at
8:30 a.m. Eastern Time to discuss the results of its second quarter
and its expectations for the remainder of 2004. The webcast can be
accessed through the Company's Investor Relations site at
http://www.scmmicro.com/ir_en/index.html and a telephonic replay
also will be available for one week by dialing 800-642-1687 (or
706-645-9291 from outside the U.S.) and entering the conference ID
number 8505896. About SCM Microsystems SCM Microsystems is a
leading supplier of solutions that open the Digital World by
enabling people to securely access digital content and services.
The company markets and sells its smart card reader technology for
network and physical access and conditional access modules for
secure digital TV decryption to OEM customers in the government,
financial, enterprise and broadcasting markets worldwide. Global
headquarters are in Fremont, California, with European headquarters
in Ismaning, Germany. For additional information, visit the SCM
Microsystems web site at http://www.scmmicro.com/. NOTE: This press
release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934. These statements are
subject to risks and uncertainties which may cause actual results
to differ materially from those contemplated herein. These include
our statements regarding (i) our expectations for revenue and gross
margin for the second quarter and (ii) our ability to defend
ourselves against the claims in the demand letter received from a
significant European customer. No assurance can be given that we
will be successful in our defense of these claims. Other risks and
uncertainties that could cause SCM's actual business and operating
results to differ include, but are not limited to our ability to
grow based on a strategy of participating in multiple early stage
markets; our ability to successfully develop and introduce new
products that satisfy the evolving and increasingly complex
requirements of customers; our dependence on a small number of
customers; the markets in which we participate or target may not
grow, converge or standardize at anticipated rates or at all; we
may not participate fully in our target markets; and competitors
could take market share or create pricing pressure. For a
discussion of further risks and uncertainties related to SCM's
business, please refer to SCM's public company reports, including
the Report on Form 10-Q for the quarter ended March 31, 2004, filed
with the U.S. Securities and Exchange Commission. DATASOURCE: SCM
Microsystems, Inc. CONTACT: Steve Moore, Chief Financial Officer,
+1-510-360-2300, or , or Darby Dye, Investor Relations-US,
+1-510-360-2302, or , or Manfred Mueller, Investor
Relations-Europe, +49 89 9595 5140, or , all of SCM Microsystems,
Inc. Web site: http://www.scmmicro.com/
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