Bogen Sees Lower Ceilings on Audio Sales
By Chris Doering

The first quarter of 2001 was, as expected, a loser for Bogen Communications. Apogee is still in "turnaround mode," but plans to introduce powered speakers at AES. Slow economic conditions and delayed availability of Federal school monies caused tough times for Bogen's Commercial Audio and Engineered Systems divisions.

Bogen expects to have a slow start to the sales year, but President Michael P. Fleischer, commented that "our first quarter this year was particularly challenging." Sales were down 15% over the same period last year, to $14,090,000. Moreover, instead of making $655,000 as they did in the first quarter of 2000, Bogen kicked off the real new millennium with a loss of $643,000.

Commercial Audio product sales were down by 12.6%, Engineered Systems by 19.7% and Pro Audio by 45.5%. Don't blame Apogee, though: they had a "particularly strong first quarter" last year. As with so many smaller pro audio companies, Apogee's sales results were skewed by a few large orders that were unlikely to be repeated just because it was the same time next year. Meanwhile R&D jumped from last year's $866,000 to $1,303,000, or 9% of sales.

Although the initial cost of the Apogee acquisition is rumored to be quite low, Bogen is still paying for the purchase of the Petaluma-based loudspeaker and electronics manufacturer. The decline in sales of Pro Audio products "which have a lower gross margin than core products," according to Bogen's income statement, actually helped the gross margin, which rose from 47.7% to 50%. However, Bogen reports a more efficient operation and lower costs in Petaluma. Combined with the powered loudspeaker introduction at AES, the managers expect Apogee to turn the corner to profitability in the third quarter of this year.