MIAMI _ For a while, it looked like the beat wouldn't go on for the Singing Machine Co. The largest manufacturer of home karaoke machines in North America, founded in 1982, was being crowded out of retail store shelves by newer, cooler products such as portable DVD machines, MP3 players, digital picture frames and GPS tracking devices.
At the same time, the karaoke industry was reeling from piracy lawsuits from record labels, who claimed hardware manufacturers were infringing on their copyrighted music. Video games such as "Guitar Hero" and "Rock Band" surged in popularity, making karaoke seem dated.
In 2008, the Singing Machine, headquartered in Fort Lauderdale, lost $3 million and the former management bailed. Its 100,000 square-foot warehouse in Ontario, Calif., was crowded with overstock and the 50-person staff was battered by layoffs. The end seemed assured.
But today, the Singing Machine is humming a much happier tune. The publicly held company reported net sales of $48.9 million for the March 31, 2016, fiscal year end period _ an increase of 24 percent over 2015 of $39.3 million. Gross profits increased by $3.6 million to $11.9 million, with a profit margin of 24.4 percent (up from 3.3 percent the year before.) Inventory decreased by 50 percent to $3.7 million.
Overall, the company reported net income of $1.7 million _ a massive leap from $0.2 million the year before. And its uptick has continued: For the third quarter, which ended June 30, the company saw a 40 percent increase in net sales over the same period in 2015. The microcap stock, which was valued at 19 cents last September, has doubled in value over the past year, currently trading at just over 40 cents on the OTC market.
In an era where the digital landscape continues to dictate how people consume their news and entertainment, and cellphones and tablets have started to make even desktop computers obsolete, Singing Machine reversed its fortunes by focusing on what consumers really want: Fun. Instead of sleek but plain surfaces and few buttons, the company started adding lights, colors and disco balls to their karaoke machines.
"We're doing the opposite of what the trend in technology is," says Gary Atkinson, CEO of Singing Machine, who joined the company in 2008 as general counsel. "We're pushing bigger speakers, bigger boxes, bigger lights. That stuff is what is really driving sales."
