Slumping sales amid an ongoing controversy over the safety of its stun guns triggered a steep decline in thirdquarter profit for Scottsdalebased Taser International.
Despite the downturn, Taser executives said they remain optimistic that the safety issue was subsiding and that they were gradually receiving scientific support for their product.
They also said the company’s gross margin widened by 4.3 percentage points from the second quarter due to improved operating efficiency and changes in its product mix.
Coupled with lower expenses, the better margin helped it stay profitable, Taser added.
‘‘I believe we’re starting to see a shift . . . from a debate primarily on the safety of the device to the appropriate use of the device,’’ Taser CEO Rick Smith said. ‘‘I think we’re going to see things die down with the continuous legal and scientific evidence supporting our cause.’’
Quarterly net income dropped to $270,945, or less than 1 cent per share, from $6.1 million, or 11 cents per share, the year before.
Net sales totaled $11.7 million in the latest quarter, down 38 percent from
$18.9 million a year earlier, the company said Wednesday.
Sales for the year to date totaled $35 million, compared with $48.4 million in 2004, and nine-month net income was $948,014, compared with $14.1 million last year.
"Despite significant revenue cuts, we have maintained profitability and increased third quarter gross margins rates over the second quarter," said Tom Smith, president of Taser International and Rick Smith’s brother.
The company executives’ optimism was echoed by Joe Blankenship, financial analyst with Source Capital Group of Scottsdale.
"Despite the revenue downturn, I think they’re in the process of re-educating the law enforcement agencies about the safety issues and training and I wouldn’t be surprised if things start looking up," he said.
Tasers have been blamed for a growing list of accidental deaths, prompting police to reconsider the necessity of the devices and lawmakers to push for legislation restricting their use. Amnesty International alleges more than 120 deaths in the U.S. and Canada since June 2001.
The company has consistently denied that its products are to blame in the deaths, arguing that none have been directly linked to Tasers.
The company also contends Tasers have saved the lives of thousands of suspects who might otherwise have been fatally shot by police.
A Taser’s wires deliver two streams of electricity that carry a 50,000-volt jolt for 5 seconds, temporarily immobilizing a person by overstimulating the nervous system.
On Monday, Jefferies and Co. changed its rating from ‘‘hold’’ to ‘‘buy’’ which sent Taser’s stock climbing. But after news of the thirdquarter earnings Wednesday, Taser shares fell 44 cents on the Nasdaq exchange and closed at $6.53.
The stock has traded in a 52-week range between $5.37 and $33.45.