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Post# of 173961
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MikeDDKing

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MikeDDKing

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Re: researcher59 post# 87313

Tuesday, 11/13/2007 12:38:24 PM

Tuesday, November 13, 2007 12:38:24 PM

Post# of 173961
Yes...I listened to the GXYF conference call and I am quite pissed at the way they wrote their PR. The one concern I have had on GXYF recently is their raw material costs. This is the reason that I haven't been buying the stock prior to earnings. The major ingredient that they use in their product is called casein. I knew that the prices of casein had been going up significantly but it wasn't clear to me how big of an impact that would be on them. I assumed it wasn't a problem with the PR this morning. Well, now I know it is a huge impact as discussed in the CC! Without pricing increases it will impact GM by 25% in Q3 and 50% in Q4. This means that GM will be in the 30% ballpark in Q3 and 20% ballpark in Q4 without price increases. They are working on price increases but that takes time and will not match the raw material price increases in the short term. Unfortunately, I don't think the outlook is that good for the next several quarters and I opted to sell my shares at a loss. I'm expecting Q3 to be around break even and Q4 to be at least somewhat of a loss and possibly a significant loss. I'm really mad that they didn't put something about this in the PR as it is quite material. They could have at least mentioned something about cost pressure impacting further profitability!

Here is a link to Casein prices:
http://future.aae.wisc.edu/data/monthly_values/by_area/801?tab=prices

Mike
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