Loss Prompts Franklin Review
-- Publishers Weekly, 7/12/1999
Franklin Electronic Publishers reported a net loss of $30.2 million for the fiscal year ended March 31, 1999, compared to net income of $1.4 million in the previous year. Sales in fiscal 1999 rose 4% to $103.8 million. The huge loss has prompted Franklin to evaluate the feasibility of continuing to sell its REX product line as well as its Rocket eBooks.Franklin began selling Rocket eBooks only this past spring (News, Jan. 11); sales have been disappointing, according to the company, and it is uncertain whether Franklin can continue to market the line in light of current retail prices. Regarding the future of REX, Franklin's credit-card-size device that downloads information from a personal computer, the company indicated that it may not have adequate financing to bring out new models. Sales of REX rose 54% to $15.7 million, but Franklin attributed half of the operating income decline to the REX product line, due largely to write-offs.
One-time charges that contributed to Franklin's loss included an inventory write-down of $13.5 million, a $6 million write-down of royalty advances and a $2.4 million write-down associated with corporate restructuring and management changes. More losses are expected for the first quarter because of seasonally low sales; inventory and expense write-offs connected to Rocket eBook; and severance and other expenses related to Franklin's restructuring and to the closing of foreign subsidiaries.
