Planar Cuts 50 Jobs in Austerity Move to Cope With $9.9 Million Loss
Home theater continues to be a “very challenging market space,” Planar Systems CEO Gerry Perkel said on the company’s fiscal Q2 earnings call late Wednesday. Revenue in home theater products was lower year over year and customers “are still buying products,” he said, but it’s “nowhere near at the rate that they were a year ago.” Trends playing out throughout the TV market toward lower-priced purchases are evident at Planar, too, where “a year or two or three ago people might have been spending a little bit more per projector or per home theater construction project” but that spending is now “a little bit less” with “some lower cost products,” he said.
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Planar doesn’t expect the shift to lower-priced products to improve, “so we are doing what we can to make sure that we are as much in control of what we need to do from an expense standpoint given that revenue level,” he said. In response to an analyst questioning whether the Runco brand had become a “boat anchor” to Planar’s bottom line, Perkel said the company doesn’t go through full profit and loss figures for each product line. In any given quarter, the company is always “trimming expenses to make sure they are aligned with revenue,” he said. “We are looking at everything we can to make sure they are not too much of a drag for us."
Sales in Planar’s commercial and industrial product lines, which includes home products, were $30 million, down 18 percent from Q2 2011. “Good growth” in desktop monitors and touch monitor product lines were offset by declines in rear-projection cubes, EL and high-end home lines, Perkel said.
Planar reported a loss for the quarter of $9.9 million, compared with a loss of $1.4 million for fiscal Q2 2011. Revenue was down more than $10 million to $37.5 million for the period, the company said. Sales declines were due to smaller average order size “as a number of larger transactions slipped outside the quarter,” softer demand from some OEM customers, a backlog of inventory due to order scheduling and a loss of productivity resulting from changes in the sales organization as part of a shift to “the digital signage and growth opportunity,” Perkel said.
The company cut 50 jobs as part of a cost reduction plan and recorded a $500,000 net restructuring charge, it said. Digital signage revenue was $7.5 million, down 34 percent from Q2 2011, due to “large shipments of custom digital signage displays in the prior year which did not repeat in the second quarter of fiscal 2012,” Perkel said.
Planar continues to look at standard digital signage as its most promising growth area, Planar said. Total revenue for the quarter fell 22 percent year over year, with declines in all geographical regions, the company said, including a drop of 18 percent for the Americas, 37 percent for Europe, the Middle East and Asia and 23 percent for Asia Pacific.