By Rene Rodriguez / Miami Herald/TNS
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, California, 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.
Doubled in value
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 in 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 cell phones 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,” said 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.”
Keeping up
THE company’s first retooled machine was the SML385 (“I wish we had named it a little better,” Atkinson said), an inviting contraption of swirling colors with a top-loading compact-disc mechanism and a wired microphone.
An output jack connects to the TV, so the consumer can read the lyrics as he sings along. Sold for $70, the unit remains of the company’s most popular seven years after its 2008 launch. In 2015 it was Singing Machine’s No. 1 seller, moving 250,000 units.
But Singing Machine has also kept up with the times.
The company’s web site breaks down its karaoke products into three categories: The Classic Series, or analog machines that use traditional CD technology; the Download Series, which use an 8-giagbyte USB flash drive to download songs from the company’s online store and outputs high-definition graphics via HDMI; and the Streaming Series, an elegant 2.1 channel Bluetooth speaker with a remote control that doubles as a microphone. (The unit also streams HD karaoke videos on-demand to the TV via a Wi-Fi connection.)
Image credits: Charles Trainor Jr./Miami Herald/TNS