Digi International Inc. (DGII, Financial) filed Quarterly Report for the period ended 2011-12-31.
Digi International Inc. has a market cap of $300.2 million; its shares were traded at around $11.71 with a P/E ratio of 31.6 and P/S ratio of 1.5.
Net sales decreased by $1.6 million, or 3.5%, for the three months ended December 31, 2011 compared to the three months ended December 31, 2010. We did not experience a material change in revenue due to pricing during the first quarter of fiscal 2012 or the first quarter of fiscal 2011.
Our non-embedded net sales decreased by $2.3 million, or 8.8%, for the three months ended December 31, 2011 compared to the three months ended December 31, 2010. The decrease was primarily driven by a decrease of $1.7 million in net sales of cellular products primarily due to the buying patterns from a few large customers. There were also decreases of $1.0 million in wireless communication adaptors and $0.6 million in serial cards and USB connected devices, which was partially offset by an increase of $1.0 million in net sales of serial servers. Sales of serial cards have been historically declining and we expect that trend to continue. We believe net sales of non-embedded products were reduced by approximately $0.8 million due to the impact of the flooding in Thailand.
Our embedded net sales increased by $0.7 million, or 3.4%, for the three months ended December 31, 2011 compared to the three months ended December 31, 2010, mostly related to increases in net sales of $0.4 million in engineering design services and iDigi® services and an increase of $0.3 million in net sales of modules. We believe net sales of modules were reduced by approximately $2.2 million due to the impact of the flooding in Thailand.
Gross margins were 52.4% and 51.0% for the three months ended December 31, 2011 and 2010, respectively. The increase in the gross margin for the three months ended December 31, 2011 as compared to the same period a year ago primarily was due to product cost reduction, manufacturing efficiencies and reduced purchased and core technology amortization as certain purchased and core technologies are now fully amortized, partially offset by an increase in inventory obsolescence expense. We do not expect that increased inventory obsolescence expense is a trend that will continue in future periods. The flooding in Thailand reduced our gross profit by approximately $1.9 million due to lower revenue and additional costs incurred in the restoration for certain of our product lines built by our contract manufacturer located in Bangkok. For the three months ended December 31, 2011, gross margin was impacted by less than one percentage point as a result of the flooding in Thailand.
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Digi International Inc. has a market cap of $300.2 million; its shares were traded at around $11.71 with a P/E ratio of 31.6 and P/S ratio of 1.5.
Highlight of Business Operations:
Net sales decreased from $48.3 million in the first quarter of fiscal 2011 to $46.7 million in the first quarter of fiscal 2012, a decrease of $1.6 million, or 3.5%. Net sales decreased as a result of the flooding in Thailand, some economic weakness primarily in Europe, and buying patterns for a few of our larger customers. This was partially offset by an increase in demand primarily in North America. Our wireless products net sales were $20.2 million in the first quarter of fiscal 2011 compared to $19.8 million in the first quarter of fiscal 2012, a decrease of $0.4 million, or 1.8%. Gross profit was $24.4 million in the first quarter of fiscal 2012 compared to $24.7 million in the first quarter of fiscal 2011, a decrease of $0.3 million. We continue to employ strong cost reduction programs, which offset the $1.9 million gross profit impact from the Thailand flooding.Net sales decreased by $1.6 million, or 3.5%, for the three months ended December 31, 2011 compared to the three months ended December 31, 2010. We did not experience a material change in revenue due to pricing during the first quarter of fiscal 2012 or the first quarter of fiscal 2011.
Our non-embedded net sales decreased by $2.3 million, or 8.8%, for the three months ended December 31, 2011 compared to the three months ended December 31, 2010. The decrease was primarily driven by a decrease of $1.7 million in net sales of cellular products primarily due to the buying patterns from a few large customers. There were also decreases of $1.0 million in wireless communication adaptors and $0.6 million in serial cards and USB connected devices, which was partially offset by an increase of $1.0 million in net sales of serial servers. Sales of serial cards have been historically declining and we expect that trend to continue. We believe net sales of non-embedded products were reduced by approximately $0.8 million due to the impact of the flooding in Thailand.
Our embedded net sales increased by $0.7 million, or 3.4%, for the three months ended December 31, 2011 compared to the three months ended December 31, 2010, mostly related to increases in net sales of $0.4 million in engineering design services and iDigi® services and an increase of $0.3 million in net sales of modules. We believe net sales of modules were reduced by approximately $2.2 million due to the impact of the flooding in Thailand.
Gross margins were 52.4% and 51.0% for the three months ended December 31, 2011 and 2010, respectively. The increase in the gross margin for the three months ended December 31, 2011 as compared to the same period a year ago primarily was due to product cost reduction, manufacturing efficiencies and reduced purchased and core technology amortization as certain purchased and core technologies are now fully amortized, partially offset by an increase in inventory obsolescence expense. We do not expect that increased inventory obsolescence expense is a trend that will continue in future periods. The flooding in Thailand reduced our gross profit by approximately $1.9 million due to lower revenue and additional costs incurred in the restoration for certain of our product lines built by our contract manufacturer located in Bangkok. For the three months ended December 31, 2011, gross margin was impacted by less than one percentage point as a result of the flooding in Thailand.
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