Fledgling CalAmp Revs DBS Growth

CalAmp, an Oxnard, Calif.-based provider of wireless and content delivery solutions, last week reported an impressive 110-percent jump in revenue and a $1.4 million increase in net income for its second quarter of FY05 ended Aug. 31, compared with the same quarter last year. The company’s gain is due largely to growth in its direct broadcast satellite (DBS) business.

CalAmp is one of the largest providers of DBS equipment to outdoor users in the United States. It has been able to maintain its market position in the increasingly competitive DBS market through ongoing product development and aggressive cost effectiveness programs, the company said.

If a company needs to be relying on a sector of the satellite industry to fuel its growth, DBS is the right horse to ride. The subscriber gains for both DirecTV and EchoStar Communications [DISH] continue to gallop ahead.

As part of that growth path, CalAmp recently received approval on two new DBS products that are expected to begin shipping in volume by the end of the year. Ongoing product development and aggressive cost-effectiveness have helped CalAmp. Also a big plus is that the satellite-TV service providers are gaining market share at the expense of the cable operators.

Fred Sturm, CalAmp’s CEO, said the company’s Solutions Division generated revenues of nearly $8 million during its second quarter but is still losing money. Despite the loss, CalAmp made progress during the quarter in executing on its business plan of providing a complete end-to-end solution to consumers. It is clear CalAmp needs to improve the division’s financial performance, he added.

To that end, the company beefed up its sales and marketing team while adjusting its overhead. The goal is for the Solutions Division to turn a profit as soon as possible without hurting the ability to execute on its business model. The outlook for the company’s 3Q05 fiscal year predicts revenues in the range of $50 million to $58 million, and earnings of between 7 cents and 12 cents per diluted share. Those estimates include charges of $461,000 for amortization of intangible assets, Strum said.

(Rick Vitelle, CalAmp, 805/987-9000)