Digital Camera News

March 16, 2006

Ampex Files Annual Earnings Report

March 16, 2006 – Ampex Corporation, the digital information technology company that sued almost every major digital camera manufacturer within the past two years, filed its annual earnings report yesterday. Because of its licensing agreements, Ampex raked in $28.9 million in revenue. Combined with the sale of its recording products, Ampex reported total revenues of $53.2 million in 2005.

That may sound like a large number, but Ampex’s revenue has significantly decreased from its break-out year of 2004. In that year, the company earned $101.5 million of revenue with a whopping $72.9 million coming from its licensing segment. This came after Ampex sued almost a dozen manufacturers of digital still cameras and camcorders and won every lawsuit. The manufacturers were ordered to pay millions of dollars up front, then to pay running royalties when the patents expire.

The first of Ampex’s many patents expires on April 11, 2006; the rest expire on various dates through 2014. The patent infringements relate to digital compression and feed forward quantization technology that Ampex developed years ago. Sony paid a $40 million lump sum in November 2004 as part of an agreement to use the technologies through April 2006. Beginning next month, Sony will pay royalties to Ampex.

Other companies paid large amounts of money with the same deal: pay a lot now and a little later. Olympus paid $3 million, Canon and Sanyo forked over $25.1 million, Casio and Samsung paid $3 million, and $5.5 million came from Panasonic, Pentax, and JVC.

Ampex Corporation filed a lawsuit against Kodak in October 2004 for infringing on a patent involving video and still image compression technology that stores and retrieves images. According to yesterday’s press release, the patent litigations against Kodak "adversely impacted our licensing segment’s operating income" in 2005. The litigation costs against Kodak totaled $9.5 million in 2005; the trial is scheduled for December 2006.

According to Ampex’s report, the company’s product line is undergoing a transition from tape recorders to disc-based recorders. Sales of its products brought in $24.2 million in 2005. The recorders are being used in development of the Boeing 787 airplane and for unnamed purposes in the U.S. Navy. As for 2006 predictions, Ampex Corporation is declining to put out any numbers.

"Due to the uncertain timing of license negotiations and the possible need to bring litigation, we are unable to provide a forecast of licensing revenue or operating profit in 2006," stated yesterday’s press release.