23 Feb 2006 - PowerLinx Issues First Investor Update Since April 2005 Restructuring
ST. PETERSBURG, Fla.--(BUSINESS WIRE)--Feb. 23, 2006--PowerLinx, Inc. (OTCBB:PWLX - News) initiated a restructuring during the second quarter of 2005 to reduce expenses, to focus resources on its core power line technology and to make changes in its business model that would take advantage of licensing and outsourcing opportunities.
PowerLinx developed a new, aggressive budget during the second quarter of 2005 that projected a reduction in annual expenses of $1 million. The Company successfully managed its expenses within budget during the second and third quarters. The Company is now on track to achieve the budgeted $1 million expense reduction.
The Company closed three business units during the second quarter of 2005 in order to concentrate its resources on PowerLinx power line communications technology. PowerLinx closed the Hotel/MDU integrator/installer business, eliminated the government sector sales department and shut down its telemarketing operation. In addition, the Company narrowed its 2005/2006 research and development effort and is focusing on products that function within homes and small offices where the power grid is much less complex. The lesser complexity in these structures requires less engineering to create marketable technology and suitable products. This new approach is consistent with the Company's strategy, revised during the restructuring, to focus on uses of the Company's technology that are the fastest to market yet appeal to large audiences with correspondingly greater revenue opportunities.
The reduction of expenses and the closing of under-performing business units, combined with the refocusing of sales efforts on core products have produced positive results. The Company achieved revenue growth of only 16% for the second quarter ended June 30, 2005, compared to the same period ended in 2004; but achieved revenue growth of 161% in the third quarter ended September 30, 2005, compared to the same period ended in 2004. In addition, as announced in October, the Company is on schedule to introduce new power line communication products in the second quarter with additional introductions to follow later in the year.
As its first priority, PowerLinx is pursuing licensing partners for new technologies and products. At the same time, it is considering taking new products directly to market if this approach is the most advantageous.
PowerLinx has outsourced manufacturing to IC Intracom that has delivered the first shipment of goods manufactured in Asia. This change in manufacturing has reduced the cost of goods sold and has freed resources within PowerLinx allowing the Company to concentrate on its core competence of developing power line communication technology and products.
Mike Tomlinson, CEO of PowerLinx stated, "The Company is executing its new strategic plan and successfully achieving the set objectives. This positive performance has resulted in revenue growth and a reduction in operating expenses. The Company has also developed new revenue producing products ready to market. In addition, new licensing partners have been pursued and more outsourcing opportunities have been researched. Management is encouraged by the results achieved to-date and we are excited about the introduction of new products this year."
According to Tomlinson, the estimated release dates are based on the most recent project plan timelines. Risks associated with engineering new technology and certain external influences, such as regulatory approvals or component availability, have been factored in but may shorten or lengthen time to market by several weeks.