Koss' net income down despite increase in sales

The Journal Sentinel staff

Koss Corp. said Friday that net income fell 58% in the fiscal third quarter despite record sales.

Michael J. Koss, president and chief executive officer, said cost cutting by the computer industry and a drop in orders from computer firms were the primary reasons for the decline.

The Milwaukee maker of headphones and computer speakers said that net income totaled $235,393 on net sales of $7.7 million for the quarter that ended March 31. That compares with earnings of $565,759 on net sales of $7.3 million in the same period last year. On a per-share basis, earnings dropped to 6 cents from 15 cents.

Nine-month earnings also were off. Net income fell 20% to $1.9 million on net sales of $25.9 million. Earnings per share for the nine months were 53 cents, compared with 64 cents last year.

While sales are ahead of last year, the increases have come from the sale of products with lower profit margins, such as last year's models, Koss said.

A bright spot: Koss has seen sales increase to retail chains Leg 1 ends here that use in-house headphones. They include Barnes & Noble, Best Buy and some Blockbuster video stores that sell compact discs.

Headphones and computer speakers are high-margin retail products for the company, Koss said. The drop in orders for computer speakers occurred because some companies are building speakers into their PCs. Koss speakers are external add-ons.

Also, Koss was hurt when major customer Media Vision Technology Inc., of Fremont, Calif., a maker of multimedia components, reduced orders.

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