UPDATE 2-Taser posts wider-than-expected loss as R&D costs soar

Thu Oct 22, 2009 9:16am EDT

* Q3 loss of $0.05 vs est loss of $0.03

* Net sales rise 2 pct

* Shares fall in pre-mkt trade (Recasts; adds details)

Oct 22 (Reuters) - Stun-gun maker Taser International Inc (TASR.O) posted a wider-than-expected quarterly loss as research and development expenses doubled.

Rising R&D spending has been a drag on the earnings of the company, whose guns are used to incapacitate people through a 50,000-volt jolt of electricity.

Taser, however, expects R&D costs to return to more normal levels in the fourth quarter.

For the third quarter, net loss was $3.2 million, or 5 cents a share, compared with a profit of $650,377, or 1 cent a share, a year ago.

Net sales rose 2 percent to $23.3 million. International sales at the company -- including markets such as Britain, France, New Zealand, Canada and Australia -- represented 19 percent of net sales.

Analysts on average were expecting the company to post a loss of 3 cents a share, on revenue of $20.9 million, according to Thomson Reuters I/B/E/S.

Sales to its federal and military customers rose significantly in the quarter, the company said. Taser -- whose guns are bought not only by the police, military and correction facilities, but also by individuals and casinos -- is offering a trade-in program to enable agencies to easily upgrade to the Taser X3.

The X3 is a multi-shot electronic gun that can engage multiple targets.

R&D expenses jumped to $6.7 million in the quarter, mainly due to "intensive" efforts to bring multiple new products to market, including X3, Axon and Evidence.com, the company said.

Evidence.com is a portal where video grabs, while using Taser guns, can be uploaded for litigation-related evidence. Axon is an audio-video device that can be connected to stun guns to grab footage of incidents.

Shares of the Scottsdale, Arizona-based company were down at $4.50 in low volume pre-market trade. They closed at $4.56 Wednesday on Nasdaq. (Reporting by Bhaswati Mukhopadhyay in Bangalore; Editing by Anne Pallivathuckal)

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