Interphase Corporation (NASDAQ: INPH), a diversified information and communications technology company, today reported financial results for its third quarter ended September 30, 2012.
Revenues for the third quarter of 2012 were $3.2 million, a decrease of $2.3 million when compared to revenues from the third quarter of 2011 of $5.5 million. Revenues in the quarter were primarily derived from telecommunications product revenues, which decreased to $1.9 million in the third quarter of 2012 compared to $4.4 million for the third quarter of 2011. Services revenues increased approximately 26% to $1.0 million for the third quarter of 2012 compared to $831,000 for the third quarter of 2011. Gross margin was 46% for the third quarter of 2012 compared to 47% for the third quarter of 2011. The decrease in gross margin percentage was primarily due to decreased utilization of the company’s manufacturing facility partially offset by a shift in product mix toward higher margin products. The company reported a net loss of $541,000, or ($0.08) per share in the third quarter of 2012 compared to a net income of $59,000, or $0.01 per fully diluted share in the third quarter of 2011.
On October 19, 2012, the company committed to a plan intended to improve the balance between the company’s telecommunications product expenses with the reduced revenue levels of this product line. This plan is expected to result in savings of approximately $1.0 million to $1.6 million in annualized operating costs. As part of this plan, the company expects to reduce the number of its employees by approximately 12% to 16%. The company expects to incur charges for one-time termination benefits in the fourth quarter of 2012 in the amount of approximately $200,000 to $700,000.
“Early in the fourth quarter we made the very difficult decision to reduce our workforce in an effort to bring our telecommunications product related spending more in line with the recent revenue levels generated by these products,” said Gregory B. Kalush, CEO and President of Interphase. “Our recent financial performance forced us to take these actions to our expense structure in order to allow us to preserve our financial resources and apply them to growth areas of our business. We do, however, remain excited about the future prospects of our company, and look forward to the coming market introduction of penveu ® which will expand our horizons into markets that are positioned for growth; it is our expectation that these markets will embrace the significant value proposition we offer.”For the first nine months of 2012, revenues decreased to $10.7 million, compared to $18.4 million for the first nine months of 2011. Gross margin decreased to 46% for the nine months ended September 30, 2012, compared to 49% for the same period in 2011. The Company reported a net loss of $2.6 million, or ($0.37) per share for the first nine months of 2012 compared to a net income for the first nine months of 2011 of $607,000, or $0.09 per fully diluted share. On September 30, 2012, the company’s working capital position was $12.7 million, including cash and marketable securities of $9.3 million.
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