Home Net appliance vendor Netpliance (Nasdaq:NPLI)
announced lower-than-expected revenues for the quarter ending September 30
and a major shift in emphasis.
The company, which developed the consumer i-opener Net device, says it
will stop selling the device after January 31 and, instead, will focus
on providing infrastructure and managed services for devices. The company
says it will continue to support existing devices.
The company also said it was reducing its payroll by 93 employees, which
is 38 percent of its work force. The company said that move would help it
reduce its annual operating expenses by about $5.4 million and to, over
time, enable it to eliminate losses it incurred because of disappointing Net
appliance sales.
Total revenue for the quarter ending September 30 was $3.8 million and
total revenue for the first nine months of the year was $8 million, the
company reported. The company reported a net loss for the quarter of $41.9
million, or $0.69 per share. Net loss for the first nine months of the year
was $166.6 million, or $2.90 per share.
All the figures numbers were below what the company had hoped for,
according to chairman and CEO John McHale. The layoffs and changes in
direction will cause the company to incur a one-time restructuring charge of
between $2.5 million and $3.5 million in the fourth quarter, the company
says.
To accommodate the shift in direction, the company has created two new
business units. The Netpliance.net will provide managed services for
broadband service providers. The will develop infrastructure products for
data centers, points-of-presence and residential access devices.
The company reported about i-opener 49,400 subscribers at the end of the
quarter, compared to 44,000 at the end of the previous quarter. McHale
noted that the industry is growing more slowly than expected.
“While the Internet appliance market is growing at a slower pace than
originally anticipated, there remains tremendous growth potential in the
sector,” he said.
The company announced its upgraded i-opener in July but didn’t ship until
September. It also underwent a number of price and marketing changes,
initially increasing its introductory price of $99 to $399, then reducing
the price to $299.
Netpliance is the second major Net appliance-related firm in to undergo
drastic changes in the last couple of weeks. Internet Appliance Network
(IAN), which provided both technology and services for appliance vendors,
recently announced it would focus on the technology side of the business and
laid off a number of employees.
David Haskin is managing editor of internet.com’s allNetDevices site.
