CARROLLTON, Texas-CellStar Corp.’s second-quarter financial results reflected declining revenues across all three of its regions.
Revenues for the second quarter totaled $345.4 million, down from $415.5 million in the second quarter of 2003 and $471.1 million in the first quarter of 2004. CellStar said the decline was across its Asia Pacific, U.S. and Latin America regions.
The company blamed declining revenue in Asia Pacific on “significant changes in the handset market in China,” as well as its efforts to reposition itself in Singapore and The Philippines.
“During my recent visit to China, it became very apparent that the economy in the region is changing and the changes have impacted the handset market,” explained Terry Parker, executive chairman at CellStar. “Over the next several weeks, our Asia and executive management teams will be focused on assessing these new market conditions and their probable impact on our operations in the future.” Parker added that the company is in the process of determining how changes in the China market will impact the company’s proposed IPO there, which was delayed earlier this year.
Declines in the United States were due in part to chipset shortages experienced by CDMA handset suppliers and the discontinuation of CellStar’s relationship with Cricket Communications earlier this year, CellStar said. The company said declines in Latin America were focused in Mexico and in Colombia, where CellStar recently reduced its ownership by transferring equity to a local group.
Meanwhile, net income for the second quarter was $700,000, or 3 cents per share, well up from a net loss of $8.1 million, or 40 cents per share, in the year-ago quarter, but down from net income of $2.2 million, or 11 cents per share, in the first quarter of 2004.
“It is important to note that we were profitable and each of our regions contributed,” said Robert Kaiser, chief executive officer. “The results in the U.S. improved considerably from the first quarter when we reported soft revenues in our regional carrier channel. The demand to the regional carriers picked up in the second quarter, but unfortunately, we did not have the product to support the channel.”
CellStar said it handled 3 million handsets during the quarter, down from 3.6 million in last year’s second quarter and 3.8 million in first-quarter 2004. The average selling price of handsets for the quarter was $137 vs. $149 a year ago and $150 last quarter.
