Philips to Sell VCR Remote Devices in U.S., Canada : Canoga Park: Startup Voice Powered Technology expects a profit by fall.

A Canoga Park company with a largely unproven electronic gadget got a big boost last week when a giant Dutch consumer electronics concern agreed to sell its voice-activated remote control VCR device.

Last fall Voice Powered Technology International Inc. began selling its device, a first-of-its-kind product that allows users to program their videocassette recorders by speaking into a remote control unit instead of having to punch in buttons. Thus far Voice Powered has marketed the product on radio spots and in television infomercials, and customers called in orders by telephone.

Through direct sales, the company says it has shipped more than 50,000 units so far, each priced at $149 to $169. But after accumulating more than $10 million in losses on sales of just $6.2 million from the beginning of 1991 through March 31 of this year, Voice Powered now expects to turn profitable some time this fall.

The company’s hopes are based largely on its agreement with Philips Consumer Electronics Co., a unit of Philips N.V., a Dutch concern with $32 billion in annual revenue.

Philips plans to sell Voice Powered’s VCR Voice Programmer on an exclusive basis under its Magnavox brand to such retailers as Circuit City and Good Guys in the United States and Canada starting this fall.

“We’re talking about a multibillion dollar company that has gotten into a partnership with us, and for one of the first times has taken a product that wasn’t of their own making and put their weight behind it,” said Voice Powered’s chairman and chief executive, Michael Bissonnette.

Terms of the agreement were not disclosed. But Ed Krakauer, Voice Powered’s chief operating officer, said that the pact calls for Philips to meet a certain level of sales through March 31, 1994. Based on that minimum sales goal--and the fact that Voice Powered won’t increase its own overhead by adding sales and distribution staff--the company’s profit from the venture should be “as much as we would earn if we had gone into the retail channel ourselves,” Krakauer said.

The VCR Voice Programmer is designed for those people who have trouble programming their VCRs. A user sets up the programmer by recording voice commands. Up to four different voices can be programmed into the device. In addition to recording future programs, the device allows users to change channels and fast-forward through taped commercials.

The new distribution agreement followed a licensing deal announced two months ago under which Philips will include Voice Powered’s voice-recognition technology with four of its Magnavox and Philips brand VCRs. Those VCRs, expected in stores this summer, will retail for $400 to $600.

Despite its Philips deal, some investors are still betting that Voice Powered will have problems.

The amount of short interest in Voice Powered’s stock nearly quadrupled in the month ended May 14, to 2.4% of the company’s total outstanding shares.

Short interest is the number of shares held by short sellers, who profit by a decline in the price of a stock. Short sellers operate by borrowing shares of a stock and then selling them immediately in the hope that the stock price falls. The short seller then hopes to buy the shares back at a lower price and return them to the lender, pocketing the difference.

Voice Powered’s stock has already fallen since its initial public offering last October. The company raised net proceeds of $5.04 million by selling 1.5 million units, with each unit consisting of one share of common stock and one-half warrant.

After reaching $10.50 a share early this year, Voice Powered’s stock has declined to $5.75 as of Friday’s close. The stock has fallen about $1 a share since announcement of the Philips deal.

Some observers have expressed doubt about the voice programmer’s potential because of its high price. The device costs significantly more than the highly successful VCR Plus programmer by Pasadena-based Gemstar Development Corp., which sells for about $60.

The VCR Plus is a hand-held device that requires users to punch in numerical codes for specific shows they want recorded. The codes are printed in newspaper TV listings and TV Guide.

Though privately held Gemstar doesn’t disclose its sales, industry observers estimate that it sold more than 2 million units in its first year.

David Ellis, a Gemstar spokesman, maintained that Voice Powered’s agreement with Philips is not a threat to VCR Plus. “Gemstar has licensed the VCR Plus technology to 100% of the VCR manufacturers in the world,” he said. “In effect, VCR Plus is the new standard. We offer consumers the fastest, easiest, affordable programming system.”

Nonetheless, Voice Powered has its believers, among them Christopher Marlett, a principal in Marlett/Mazzarella, an investment banking division of Drake Capital Securities in Santa Monica, the underwriter of Voice Powered’s stock offering.

Marlett estimated that through Philips at least 300,000 voice programmer units will be sold in the first six months. “This could be very well received by retailers,” he said.

Despite its first foray into the retail market, Voice Powered plans to keep its direct sales operation going.

It also plans to begin marketing new units with built-in codes for certain brands of televisions and VCRs, thus eliminating much of the set-up work for consumers. Another remote unit that controls both VCRs and stereos is also in development.

Voice Powered also wants to begin selling its programmers internationally. It’s working on versions that respond to seven different languages.

And helped by the credibility it has gained from the Philips deal, the company hopes to land licensing agreements with other VCR manufacturers.

Said Bissonnette: “We’ll be announcing other major deals within the next 60 days.”