News

The audio business has been claiming its share of victims lately, with few companies able to reanimate once economic problems set in. Working hard to break this cycle, Carver Corp. became one of the first manufacturers to switch from a dealer-based operation to both dealers and internet sales.

"Internet and direct marketing sales have exceeded expectations. Sales on the Internet and through telephone orders have occurred in all product categories with no advertising expense and with high gross margins," stated Raj Bhatia, Carver's new Chairman and interim CEO.

Bhatia went on to say that "the Internet, in particular, has generated revenues well in excess of our expectations. We are launching a new marketing program aimed at providing profit and distribution incentives to our independent dealer base which will incorporate the benefits of e-commerce."

Carver's Board of Directors has also taken several preemptive measures to effect a turnaround in the company's operations (see previous story), including a reduction of fixed overhead from approximately $350,000 per month to approximately $160,000, reduction of staff from 84 to 26, and the reduction of the company's balance due under its line of credit from $1,500,000 to $400,000.

According to Bhatia, "We are taking every step that is necessary to make this company's cash flow positive in the short term. Enough is enough, and positive change is long overdue. There is no question that the Carver brand equity is very high in the marketplace and can be made to work very profitably under the right management."

The company also announced that it has received an extension on its NASDAQ National Market listing until July 23, 1998. The Board of Directors, which assumed operational control of the company on June 1, 1998, will present its new business plan to the NASDAQ review board at that time.

The Board of Directors is also on the lookout to fill the position of permanent CEO. "We are looking for an entrepreneur who is willing to be very aggressive in the turnaround and growth phase and will put their own capital at risk in the company. We expect to make a selection very soon," stated Bhatia.