Digital Power Reports Financial Results For Third Quarter 2008
Digital Power Corp. announced its financial results for the third quarter ended September 30, 2008. Net income was $362,000 for the three months ended September 30, 2008, an increase of 8.8 times the net income of $41,000 for the three months ended September 30, 2007, and net income of $215,000 for the three months ended June 30, 2008. The significant increase was achieved despite a decrease in revenues to $2,825,000 for the third quarter of 2008 from $3,028,000 for the same quarter of 2007 and $3,347,000 for the second quarter of 2008. The company also reported an operating profit of $300,000 for the third quarter of 2008, compared to an operating profit of $22,000 for the third quarter of 2007, and an operating profit of $206,000 for the second quarter of 2008.
Net income for the nine months ended September 30, 2008, was $416,000, compared to a net loss of $114,000 for the same period in 2007. Revenue for the nine months ended September 30, 2008, was $9,341,000, an increase from revenue of $8,306,000 for the nine months ended September 30, 2007.
Commenting on the results, President and CEO Amos Kohn stated, "While we are disappointed in the decline in revenue for our third quarter, it should be noted that this resulted primarily from the rescheduling of shipments by two of our larger European customers and was not reflective of a broad-based downturn in business.
"Despite this decrease in revenue, we were able to post significant increases in both operating profit and net income for the Company over the comparable period in 2007, due to a dramatic improvement in gross margins from 26% to 38%. Several tactical factors contributed to this, including continued outsourcing to our Chinese contract manufacturers, cost reductions and variations in our product mix from quarter to quarter. In addition, we experienced a significant increase in revenues from some of our older product lines which contribute higher gross margins. "We believe some of this business may be of a seasonal nature and that it most likely will not signify similar increases in gross margin in the future. However, we believe the most important factor was our strategic shift earlier in the year away from a dependence upon commoditized products to more integrated custom product solutions. This value-added platform of solutions, where Digital Power works in concert with our strategic customers and their partners, requires a more direct, consultive selling effort on our part. To support this strategy, we doubled our outside sales management teams during the quarter."