Telematics -- application of voice and wireless technology to in-vehicle services -- potentially creates major revenue stream to automakers but only with help of consumer electronics and telecom industries, experts said. Opportunity is huge, $9 billion by 2004, and expected to reach $20-$40 billion within 10 years, Booz-Allen & Hamilton consultants said. Despite recent restrictions on using cellphones while driving, telematics is poised to become recurring high-margin service, but auto industry may have difficulty reaping benefit, Booz-Allen said in report: “Telematics largely will be driven by external industry dynamics, such as the emergence of new telecom protocols, over which traditional automotive players have little control.”

Zoran 3rd quarter net income narrowed to $2.7 million from $4 million year ago but revenue increased to $30.4 million from $24 million. Operating income plunged to $827,000 from $2.5 million amid price competition in DVD market. Product sales, which include those from Vaddis DVD decoder ICs, jumped to $28.9 million from $20.3 million. Licensing and development revenue declined to $1.4 million from $3.6 million. DVD ICs accounted for 84% of revenue in quarter, followed by digital camera ICs and sensors (10%), PC video (5%), audio (1%) decoders. Inventory rose to $19 million from $17.4 million Dec. 31. As it released earnings, Zoran said it was moving to discontinue Vaddis III DVD decoder IC, replacing it by year-end with Vaddis IV, which adds video encoder and DTS audio. Zoran also is pushing Vaddis V DVD multimedia processor, which recently was installed in Sharp and Toshiba progressive scan DVD players. Vaddis V has 135 MHz, 32- bit Risc processor, MLP, DTS and Dolby Digital decoding and advanced trick play features such as smooth scan and zoom. Despite phasing out Vaddis III, Zoran forecast it would account for 30-40% of revenue in 4th quarter, while Vaddis IV has 40-50% and Vaddis V, 10-30%.

Lexar Media loss narrowed to $3.5 million (-6? per share) for 3rd quarter ended Sept. 30 from $14.3 million loss (-46?) same quarter year ago. But Fremont, Cal., removable digital storage media provider said revenue dropped to $18.1 million from $31 million. Lexar CEO Eric Stang said results “exceeded expectations on all fronts,” adding: “Our 3rd quarter gross margin, at 29%, and our substantial bottom line improvement were achieved through ambitious cost-reduction measures, strong supplier partnerships and improved product mix.” Stang said company was “on track” to reach profitability on operating basis in 4th quarter excluding stock-based compensation. Company recently started bundling its digital memory cards with high-end consumer and professional digital cameras from Minolta, Nikon, Olympus, Pentax.

Sony cut price $30 on Clie PEG-S320 handheld PC to $169 as company joined Palm and Handspring in lowering retails in effort to jump-start market. Sony’s S320, introduced in June, now is priced in same range as Palm’s m105 ($149), but adds expansion slot capabilities of m125 ($249). Price cut was made to “accelerate the growth” of Clie products, Sony spokesman said. Average selling price of handheld PCs dropped to $248 in Aug. from $283 year earlier, but sales grew just 11.9% compared with 207.5% year earlier, NPD Intelect said.

Genesis Microchip said 2nd quarter net income jumped to $6.6 million from $1.9 million year ago as revenue more than doubled to $36.1 million from $15 million. Genesis, which in July forecast 2nd quarter revenue of $25 million and in Sept. increased it to $30 million, said gross margin improved to $16.6 million from $9.4 million. Genesis credited new IC design contracts for increased revenue. It signed agreement in Sept. to buy rival Sage and said it would complete acquisition by March. Sage, meanwhile, said it narrowed 2nd quarter net loss to $3.8 million from $6.2 million year ago as revenue rose to $9.9 million from $8.6 million. Loss included $1.1 million charge related to expenses in proposed merger with Genesis.

Boston Acoustics 2nd-quarter profit fell 67% to $736,255 (15? per share) on 41% sales decline to $20.54 million from $38.58 million. Sales in OEM/multimedia sector were especially hard hit, falling 63%, although core audio and home theater revenue also slid significant 14%. CEO Andrew Kotsatos said company managed to remain profitable in quarter despite sharply lower sales by improving gross margin, boosting operating efficiencies and realizing benefits of cost-tightening steps started last Jan.

James Warren, ex-Panasonic, joins Samsung Professional Products Group as systems application engineer… David Novak, mktg. dir., Pace Micro Technology Americas, named featured panelist at Kagan VoD Summit Oct. 24 in N.Y.C… Cecil van Alsburg to retire Oct. 24 as chmn., Applied Films Corp., succeeded by Richard Beck… John Sculley, senior partner at Signature21 and onetime Apple, joins nextSource advisory board.

Matsushita will start selling “Q” DVD player -- SL-GC10 -- that can play games for Nintendo’s GameCube system Dec. 14 in Japan at ?39,800 ($329). In addition to GameCube and DVD-Video discs, Q will be compatible with audio CD, CD-RW, DVD-R, Video CD formats. CE manufacturer said that while player also was compatible with DVD-R discs recorded with its Panasonic DMR-E20 DVD-Video recorder, “other DVD-R discs may not be able to play back depending on the DVD-R disc used and the recording conditions.” Matsushita said it intends to produce 15,000 units of new DVD player monthly. Player features LCD display on front panel. Matsushita said it had “various sound and visual effect functions for enhanced enjoyment of movies and games software.” But U.S. Matsushita spokesman told us Fri.: “There are no plans -- currently anyway -- for [a] U.S. launch. This is a Japan market product only.” Matsushita supplies disc drives and discs for GameCube console. Companies first announced they were collaborating on GameCube console in May 1999, when console was code-named Dolphin. Later, at Spaceworld show in Tokyo in Aug. 2000, companies revealed GameCube would incorporate drive that played 8 cm proprietary 1.5 optical disc from Matsushita. GameCube and Q represent reentry into videogame arena for Matsushita, which was one of original hardware licensees for 3DO’s ill-fated Multiplayer. Matsushita spent $100 million in 1995 to buy 3DO’s M2 gaming technology before eventually deciding against bringing product to market.

David Nagel, who was lured from AT&T to head Palm’s new operating system (OS) subsidiary, will receive $620,000 starting salary and $200,000 hiring bonus, said letter in recent SEC filing. Palm in July announced plan to separate OS business as subsidiary and letter outlined steps being taken to accomplish that, including possible spinoff. “The separation process may include legal separation, third party investments by strategic partners, sub-IPO and spinoff,” Palm said. Nagel also will get restricted stock grant in Palm shares along with options to buy 6.5% of shares in Palm OS business once it has made subsidiary late this year. Grant of 50,000 shares will vest in 2 years, but will “accelerate” after first release of Palm OS based on StrongArm processor, Plam said. ARM-based OS is expected to be released in 2002 and company has said project remains on track.

Electronic Arts became pilot customer of Kontiki, company that offers secure network for delivering digital media files over Web. Kontiki said its network allowed its customers to deliver entertainment and other TV-quality content direct to users’ PCs. Other pilot customers of Kontiki include Amazon.com, LivePlanet, MP3.com, Palm, Sony Pictures Entertainment, TiVo, Verisign. Companies said Kontiki services might dramatically lower their cost of sales, marketing, training and travel, while increasing revenue and customer royalty. Preview of pilot network is available by downloading Kontiki at www.kontiki.com. Following pilot period, first production release of Kontiki Delivery Network is expected later in 4th quarter.