EXHIBIT 99.1
Contact: Leslie Green
Stapleton Communications Inc.
650.470.0200
GENERAL MAGIC ANNOUNCES SECOND QUARTER 2002 RESULTS
SUNNYVALE, Calif. - July 31, 2002 - General Magic, Inc. (Nasdaq: GMGC), a
pioneer in voice application software and services, today announced operating
results for the second quarter ended June 30, 2002.
Revenue for the second quarter ended June 30, 2002, was $2.1 million, compared
with $2.5 million reported in the first quarter of 2002 and with $1.0 million
reported in the second quarter of 2001.
Net loss applicable to common shareholders for the second quarter of 2002 was
$5.4 million or a loss of $0.04 per diluted share, compared with $5.3 million or
a loss of $0.06 per diluted share in the first quarter of 2002 and with $7.8
million or a loss of $0.11 per diluted share in the second quarter a year ago.
At June 30, 2002, there were 127.3 million shares of common stock outstanding.
Operating expenses for the second quarter were $7.9 million, including a
restructuring charge of approximately $513,000. This compares with $7.7 million
in the first quarter of 2002 and with $8.9 million for the second quarter of
2001. Cash and short-term investments totaled $6.5 million as of June 30, 2002,
compared with $12.1 million at March 31, 2002. The second quarter cash burn was
$5.5 million.
MANAGEMENT QUALITATIVE COMMENTS
"The second quarter was a mixed quarter for General Magic," said Kathie Layton,
president and chief executive officer. "Revenue came in lower than we expected,
due primarily to difficult market conditions and tight controls on IT spending,
resulting in a more complex decision process and longer sales cycles.
"We have responded to the current climate by taking the appropriate measures to
expedite our sales process and bring our expenses down. As we announced earlier
this month, we are accelerating our strategy to partner with top companies in
our space in order to extend our sales capabilities, shorten the sales cycle and
offer a more complete solution. We have embarked on this path with our
partnership with IntervoiceBrite, announced in April, and with our more recent
partnership announcement with Voice Genie.
"We have also taken significant cost-cutting measures, including a reduction in
our workforce and compensation reductions for our senior level management.
-More-
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General Magic Announces Q2 2002 Results
"We were pleased to be able to announce our new one-year contract with OnStar, a
wholly owned subsidiary of General Motors, valued at $2.4 million. This new
contract is in addition to our hosting agreement and extends the prior agreement
to develop and maintain the Virtual Advisor. Under the new contract, General
Magic will be working with OnStar to transition the Virtual Advisor to J2EE and
the magicTalk Enterprise Platform. This is an important proof point for our
strategy. OnStar will now have a site license to the magicTalk Enterprise
Platform, opening up opportunities for adoption for General Magic software in
other OnStar applications.
"While the revenue value of the contract is lower than our previous contract, we
were able to achieve an increase in rates, which is expected to make the
contract more profitable for General Magic. Furthermore, in order to bring our
current staffing for OnStar in line with the expected revenue level and reduced
support requirements, we have reduced the size of our team dedicated to OnStar
by approximately 60 percent. We believe that the new agreement with OnStar
represents a very positive step for both our companies.
"Finally, the completion of our reverse split not only brings us closer to
compliance with Nasdaq listing requirements, it also allows us to make
significant progress in our efforts to secure funding. We currently have a
non-binding term sheet under negotiation and, while the outcome is uncertain, we
hope to announce something shortly. At that time, we will hold a follow-up
conference call to go through the details."
GUIDANCE
The following guidance for the third quarter is based on the company's current
beliefs and expectations.
o Revenue in the third quarter of 2002 is anticipated to be in the
range of $1.4 to $2.2 million.
o Cost of revenues and operating expenses for the third quarter of
2002 are expected to be between $6.4 and $7.0 million. Included in
this projection is approximately $600,000 in depreciation and
amortization expense. This reduction in expenses reflects much of
the cost-cutting measures announced earlier in the quarter.
o Net cash burn prior to any financings is expected to be between
$3.8 and $4.1 million for the third quarter of 2002. This includes
severance payments of approximately $400,000.
-More-
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General Magic Announces Q2 2002 Results
CONFERENCE CALL INFORMATION
General Magic will be holding a conference call to discuss these results today,
Wednesday, July 31, 2002 at 1:30 p.m. PDT. The live call-in telephone number is
415-228-4943, passcode "General Magic." A replay will be available by calling
402-998-1283. A webcast of the call will be available through the investor
relations portion of the company's website at www.generalmagic.com.
ABOUT GENERAL MAGIC
General Magic is a leading voice infrastructure software company that provides
enterprise-class software and supporting voice dialog design and hosting
services that enable companies to quickly and efficiently provide anytime,
anywhere access to information and services over the telephone. General Magic's
VoiceXML & J2EE(TM)-based solutions enable enterprises to easily integrate voice
access into enterprise applications using a broad selection of speech
recognition technologies and telephony interfaces. These solutions make voice a
strategic tool in helping businesses improve the customer experience, reduce
transaction costs, and provide high quality, voice branded access to content and
services. General Magic is headquartered in Sunnyvale, Calif. For additional
information, visit www.generalmagic.com.
General Magic notes that this press release contains forward-looking statements
that speak only as of the date hereof, and involve known and unknown risks,
uncertainties and other factors that may cause industry trends, or actual
results, performance or achievement to be materially different from any future
trends, results, performance or achievements expressed or implied by these
statements. These include, among others, risks and uncertainties concerning the
adequacy of the company's financial resources to execute its business plan and
to support its continuing operations; the company's ability to secure additional
financing; the company's dependence on a single customer under contracts that
may not be renewed; market acceptance of the company's voice application
products and services; the ability of the company to establish and maintain
relationships with businesses that have high volume customer interactions, and
to establish alliances with companies that offer technology solutions for such
businesses; the risk that the company's stock may be delisted from the Nasdaq
SmallCap Market; the company's ability to generate sufficient revenues from its
products and services to operate profitably; the company's ability to attract,
retain and motivate key technical, sales, marketing and management personnel;
the challenges inherent in the development, delivery and implementation of
complex technologies; and the company's ability to respond effectively to
competitive developments. These and other risks and uncertainties are detailed
in General Magic's filings made with the Securities and Exchange Commission on
Forms 10-K, 10-Q and 8-K.
# # #
General Magic and magicTalk are trademarks of General Magic, Inc., which may be
registered in some jurisdictions.
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General Magic Announces Q2 2002 Results
FINANCIAL TABLE ATTACHED
GENERAL MAGIC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share data)
THREE-MONTH PERIODS ENDED SIX-MONTH PERIODS ENDED
JUNE 30, JUNE 30,
------------------------- ------------------------
2002 2001 2002 2001
--------- --------- --------- ---------
Revenues:
Service revenue - related party ..... $ 1,784 $ 853 $ 3,565 $ 1,998
Service revenue ..................... 211 114 455 169
Licensing revenue ................... 100 15 547 31
--------- --------- --------- ---------
Total revenue ................... 2,095 982 4,567 2,198
Costs and expenses:
Cost of service revenue - related
party ........................... 895 412 1,778 936
Cost of service revenue ........... 538 -- 1,262 --
Cost of licensing revenue ......... -- -- 62 --
Network operations ................ 589 1,412 1,340 2,872
Research and development .......... 1,721 1,748 3,499 3,283
Selling, general and administrative 2,917 3,971 5,573 7,582
Restructuring Charge .............. 513 -- 513 --
Depreciation and amortization ..... 737 1,375 1,593 2,825
--------- --------- --------- ---------
Total costs and expenses ........ 7,910 8,918 15,620 17,498
--------- --------- --------- ---------
Loss from operations ................. (5,815) (7,936) (11,053) (15,300)
Other income (expense), net .......... 331 228 318 492
--------- --------- --------- ---------
Loss before income taxes ............. (5,484) (7,708) (10,735) (14,808)
Income taxes ......................... -- -- -- 1
--------- --------- --------- ---------
Net loss ........................ $ (5,484) $ (7,708) $ (10,735) $ (14,809)
--------- --------- --------- ---------
Dividends on preferred stock ......... -- (82) -- (215)
--------- --------- --------- ---------
Loss applicable to common stockholders $ (5,484) $ (7,790) $ (10,735) $ (15,024)
========= ========= ========= =========
Basic and diluted loss per share ..... $ (0.04) $ (0.11) $ (0.10) $ (0.22)
========= ========= ========= =========
Shares used in computing per share
amounts .............................. 127,852 69,270 111,525 68,093
Net loss applicable to common stockholders for the three-month period ended June
30, 2001 includes the net loss for the period and $82 thousand in adjustments to
accumulated deficit related to dividends on preferred stock during the period.
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General Magic Announces Q2 2002 Results
Net loss applicable to common stockholders for the six-month period ended June
30, 2001 includes the net loss for the period and $215 thousand in adjustments
to accumulated deficit related to dividends on preferred stock during the
period.