Taser earnings slide 98% - East Valley Tribune: Business

Taser earnings slide 98%

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Posted: Thursday, February 23, 2006 5:49 am | Updated: 3:07 pm, Fri Oct 7, 2011.

Despite a fourth-quarter profit drop of 98 percent based on lower sales and higher expenses, Scottsdalebased Taser International stockholders can remain optimistic, said Joseph Blankenship, vice president of research for Source Capital Group.

“Actually, the overall financial status is quite good,” said Blankenship, referring to the stun gun maker’s report submitted Wednesday.

“They’re still making money, but barely,” said Blankenship of Scottsdale. “But, just as importantly, it looks like the company is retaining some order.”

He referred to the growing number of lawsuits as well as negative publicity Taser International Inc. dealt with during 2005, including the fourth quarter.

“Its going to be a slow rebuilding process, but they seem to have crossed over the bad part of the year,” Blankenship said.

Fourth- quarter income declined to $92,697, or break even per share, from $4.7 million, or 7 cents per share a year ago. Sales fell 34 percent to $12.6 million from $19.2 million compared with fourthquarter last year.

‘‘Thank God it’s behind us,’’ Taser chief executive Rick Smith said of 2005. ‘‘If you look at other companies in America last year, I think very few faced as many exogenous challenges as Taser International did.’’

For the full year, the Scottsdale-based company posted net income of $1 million, or 2 cents per share, down from $18.9 million, or 30 cents per share, in the previous year.

Sales fell 30 percent to $47.7 million from $67.6 million.

The company has been fighting lawsuits that charge its weapons played a role in accidental deaths. Taser has vigorously denied the allegations, but that has not been cheap. The company said it spent $7 million in 2005 on travel, lobbyists, lawyers and public relations to defend Taser’s reputation and brand equity.

‘‘We’ve been at war for the long-term survival of this company,’’ Smith said, adding that 40 lawsuits were filed against the company in 2005. He said in total, 43 cases are still active against the company and 12 have been dismissed.

Taser recorded a major victory in December when a jury rejected claims that the stun gun maker failed to adequately warn users of the weapons’ potential dangers.

The lawsuit, brought by an injured sheriff’s deputy, was the first to go to trial among the dozens of personal-injury, wrongful-death or excessiveuse-of-force lawsuits that have been filed against Taser.

Also in December, the Securities and Exchange Commission ended a formal investigation into the company’s claims about the safety of its stun guns, and recommended no enforcement action.

But the end-of-year victories didn’t come soon enough to help the company’s bottom line.

Taser shares fell 20 cents, or 1.9 percent, to close at $10.20 Wednesday on the Nasdaq Stock Exchange.

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