- The Washington Times - Monday, August 22, 2005

Shares of a District producer of sound systems for luxury cars jumped 32 percent since it released higher-than-expected quarterly earnings last week, growing on strong demand for its products.

Harman International Industries Inc.’s stock price rose $1.82 to close at $108.05 yesterday on the New York Stock Exchange.

Thursday the price rose $20, the largest one-day gain since the company initially sold shares in 1986.

Harman, a District producer of sound and information systems for luxury cars, reported net income for its fourth quarter ended June 30 rose 32 percent to $70.2 million ($1.01 per share) from $53 million (76 cents) a year ago.

Harman’s brands include JBL, which makes speakers that can play IPod songs; Harman Kardon, which makes car-navigation systems and amplifiers for car and home audio systems; and Studer Professional Audio, which makes equipment for live music performances.

Analysts attributed the increase in Harman’s sales, some of which comes from car dealers that add Harman products to their vehicles, to strong auto industry sales this summer, and the spike in the sale of luxury homes, whose owners are designing theater rooms and full-house speakers.

“Powerful trends are driving the stock price: demand for high-end entertainment systems in cars, home theaters and high-end stereos in homes. If you’re spending millions on a new MTV-style ‘crib,’ you better have an MTV-sized stereo,” said Ivan Feinseth, managing director of Matrix USA, a New York investment consulting company, referring to an MTV series — “Cribs” — about celebrity homes.

Consumer interest in brand names, especially high-end brand names, also has fueled Harman’s sales, Mr. Feinseth said.

Audio and navigational technology — including technology to connect an IPod to a car stereo and car wireless fidelity, or wi-fi, units to download music from a home computer to the car in the driveway — is growing with no end in sight, making Harman a strong, long-term company, Mr. Feinseth said.

Neither Mr. Feinseth nor Matrix USA do any business with or own stock in Harman.

The company expects revenue to grow 10 to 12 percent in the fiscal years ending June 30, 2006, and 2007.

In 2008, the company expects revenue to grow 19 to 20 percent because of new products in its automotive group.

“Every aspect of this business tells us that we are operating on very fertile technological ground and our primary interest there is maintaining … our remarkable technological lead we’ve developed over the years,” said Executive Chairman Sidney Harman in a conference call with investors.

Harman’s sales have been growing since the first quarter of 2003, when sales barely covered the company’s costs, Mr. Feinseth said.

“When you’re dramatically out-earning the cost of capital, you increase shareholder value — that’s what Harman has done,” he said.

The company recently won a $30 million contract with an option of up to $50 million with Harley-Davidson for navigational systems on its motorcycles.

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