Hauppauge Digital Reports Fiscal 2011 First Quarter Results

Hauppauge Digital Inc. (NASDAQ: HAUP), a leading developer of digital video TV and data broadcast receiver products for personal computers, today reported financial results for the first fiscal quarter ended December 31, 2010.

FIRST QUARTER RESULTS

Net sales were $12.9 million for the first quarter of fiscal 2011 compared to $17.9 million reported for the previous year’s first fiscal quarter.

The Company incurred a net loss of $738,220 for the first quarter of fiscal 2011 compared to a net loss of $334,551 for the first quarter of fiscal 2010. Basic and diluted net loss per share was $0.07 for the first quarter of fiscal 2011 and $0.03 the first quarter of fiscal 2010.

DISCUSSION OF RESULTS

Ken Plotkin, Hauppauge’s Chief Executive Officer stated, “Weakened market conditions in Europe, a weaker Euro exchange rate and lower sales to personal computer manufacturers contributed to the sales decline in our first fiscal quarter.

European sales, traditionally our strongest region worldwide, continue to be challenged. For the first time since the onset of the financial crisis in 2008, sales in all areas of Europe were lower in this quarter than they were in the same quarter of the previous fiscal year. Some of the sales decline in Europe was due to poor market conditions, but we have recently restructured our sales organization in Europe to focus our sales efforts on the stronger parts of the European market.

While we experienced a decline in European sales, sales to North America retailers continued to increase. The one weak sales area in North America was sales to PC manufacturers, where declines have had a significant negative impact on our revenues.

Our gross profit margins grew to over 30% in this quarter due to increased sales of our newer, more profitable products plus the decline in the low margin sales to PC manufacturers.

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