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bbotcs..SCKT..follow up: I received a reply from CFO already. The company is definitely behind their LCD shortage and the reduced production time for their Somo Computers is beginning to allow lead time for orders to drop (and they hope to be back to normal here soon to be ready for the 4th Q).
They've hired 3 people recently: senior customer service manager, an additional inside sales person, and a manufacturing engineer. They will add more as growth increases, but, this is what I like from the e-mail reply: "and by our desire to fund the positions from operations while meeting our objectives to be EBITDA and then bottom line profitable". Management is at least aware of the need to reward shareholders.
Also, they fully expect to have their bank line of credit reestablished in October and will announce it when they do.
Dave
bbotcs...SCKT... Orders--over the last two weeks I've started tracking inventory numbers for SCKT products at 6 different internet retailers (all have "same day shipping, in-stock numbers listed").
You can't get a definitive number sold cause they sell items and receive inventory every day (some numbers go up, others go down daily). What it does show me is that there is a bigger turnover than people realize now that they can restock without delay. Also, the company is getting the retailers product constantly.
Ex. in the last two days now, 591 Somo computers were delivered to the 5 retailers I follow that update numbers daily. I know the numbers are at least that (probably more cause if you add more restock than what was sold, it won't show the sells). There are days now at one retailer where they routinely sell 100+ wireless scanners on average/day (This company carries almost 800 units in stock at one time of their different scanners). There is another company that carries over 350 Somo computers in stock (and sells 20+ of them a day).
It will be interesting to see what happens in the 4th Q when they can maintain product through their whole distribution network.
I still would like to see them get that bank line of credit re-established. I've sent a message to the CFO on a few recent questions I've got and will update any news I hear.
Dave
bbotcs..SCKT..+24 cents to $2.29. Highest close since early August, which is the time when the investor who held the debt conversion was forced to start to sell (since, according to the contract, couldn't hold more than 4.99% of the company at one time).
Selling pressure is gone now, imo.
With their announcement yesterday of 50K Somo's sold so far, I figured it out (based on previous statements) and it means a record number have shipped this Q....at least 6000, maybe up to 7000. They also do a lot of orders at the end of each quarter which should add to it. With the solid growth in the scanner division, it's pretty obvious SCKT will be positive net income this quarter.
Rawnoc....If he can pull it off, it's a worthy deal. Obviously, shareholders who were hoping for $5 in the next 12 months are appropriately disappointed in the company selling even more shares under $1. (But, like I said in my previous post, selling shares at 75% of the 200 day moving average of 99 cents isn't that low. It's just low based on future potential). Perhaps they already have the buyers for the fuel and just need the product?!? Grab the market share while you can before someone else goes after it?!? More explanation is needed during the cc call. Direct questions need to be asked.
Overall for Imperial.....The biodiesel business is such a cash cow for them, I wish the CEO would just focus on that, build up revenue/net income, pay off debt and make the company legit in the eyes of institutional investors. Perhaps this is his approach here. His desire for diversification/acquisition has not paid off well yet and needs to be put on the back burner until the company is financially stable imo.
lol...you're assuming his presumption is correct! Maybe the CEO just wants to expand RIGHT NOW and doesn't care about diluting the stock to do it. Explaining this deal for "better terms for refinancing" is just a guess to make everyone who owns the stock already feel better. Doesn't mean it's true (doesn't mean it's not either).
Is it a bad deal though? Based on the closing price of $1.40 yesterday it is. But that's rather irrelevant. It went from $1.16 to $1.40 on 250K shares over 4 days. Out of 27M shares, those 250K don't get to set the price of the deal. The 50 day moving price is $1.16. The 200 day moving average is 99 cents! Based on that it isn't that much of a discount for a micro-cap company.
More explanation is needed during the upcoming CC call. That's the time to ask if there is the possibility of additional dilution to close on the upcoming refinancing or does the company think that with additional capacity/expansion/capital expenditure that they can swing it as is.
SCKT..bbotcs..why selling pressure may slow/price increase:
As you know, there has been a lot of pressure on the stock in the low $2 range pushing it back down every time it moves past it (for quite awhile now actually). Here may be why:
From original prospectus of debt conversion last fall: "Under the terms of the Note and the Warrants, a Holder may not convert the Note or exercise the Warrants to the extent (but only to the extent) such holder or any of its affiliates would beneficially own more than 4.99% of our Common Stock"
i.e. our debt convertor, Hudson Bay, can't own more than 5% of the outstanding stock without permission from the company (it's why the 13-d I've been wondering about hasn't been filed recently). That means of the 666,000 shares Hudson Bay has converted (200K earlier this spring/summer, 466K from August 6th on when the company forced the conversion), Hudson Bay has been forced to stay below 250K shares total (assuming 5% of 5M shares outstanding). As such, they've had to sell continuously to reduce their share count before converting more, especially in the last month plus.
For a micro-cap, that's a lot of selling pressure. I've been wondering why anyone would sell (after years of waiting) when things only finally started getting potentially good for SCKT.
Who knows if they will sell down to 0 shares or stop at 250K shares (we can't know) but it does give us an explanation of price lately.
Let's put it this way.....there have been bids above $2 for the last 3 days that a seller hasn't sold into. That's the first time in weeks. Perhaps the selling pressure of Husdson Bay is over??? Interesting if nothing else.
bbotcs..SCKT..independent comment on the new scanners from a person who saw them at the Vartech trade show recently
http://www.loyaltymarketing.com/post/Cliftons-Review-of-New-Technologies-at-Vartech.aspx
SCKT...first large order for newest handheld scanner
http://finance.yahoo.com/news/Cook-Medical-Selects-Socket-iw-1582330506.html?x=0
They should end up with a one-two punch revenue generating combination going forward......1. the SOMO 650 pda being used in medical/hospitality situations and replacing the now canceled HP iPaq 210 for business and 2. the Handheld Scanner market--especially with their scanner that can now have code written for Apple products and be integrated into new Apps.
bbotcs...sckt...the market for small caps isn't very strong now. Not too worried about it though. If SCKT puts up positive numbers in the 3rd Q there will be a lot of investors jumping in wondering how come they hadn't seen this stock before.
There should be an announcement in the next couple weeks concerning the conversion of their debt and the re-establishment of a line of credit. The next step in moving forward to go after the sales potentials that are hanging low in front of them.
bbotcs...SCKT...I agree with both your assessments.
The "pro" to the company is that there is great leverage there---they don't directly manufacture their product (sub-contract it) and sell it primarily through distributors for small buyers (and directly to large buyers). Increased revenue will increase gross margins nicely with minimal operating expense increases (theoretically). The expansion of the scanner business and the HP market opening up could make for some serious growth.
The "con" to the company is that one quarter of EBITDA positive does not show a true turnaround in getting profits to the bottom line (and rewarding shareholders). Operating expenses need to be kept in line and grow at a significantly less rate than gross profits. They have a long ways to go before they earn true respect from investors.
As such, the stock isn't cheap at $2 for a company that has one quarter of EBITDA positive behind it, but is also a "steal" if it comes together for them. Ah, the risk/reward of the stock market!
SCKT...make that 3 new job postings:
Latest is for Software Developer Program Manager to oversee their scanner/app/software program.
http://jobview.monster.com/software-developer-program-manager-job-newark-ca-us-100999152.aspx
For a company that has previously reduced salaries and personnel (currently have 64 employees), three new hires is definitely a change of direction. The CEO said in the last CC Call that any new hires would only occur with revenue growth. He said that "We are experiencing a significant increase in calls from current HP, iPAQ customers and resellers looking for an alternative as supplies of the HP iPAQ diminish. We believe we have not yet seen the full positive impact of HP’s departure." Perhaps these are turning to real orders?
It'd be nice to see the company turn themselves around. Still question managements ability so be careful here.
bbotcs....SCKT..... I emailed the CFO, Dave Dunlap, at Dave@socketmobile.com the following question on August 2nd (cause I too was worried about if they were ever going to "catch up" on backorders).
My Question: "On the LCD shortage.....It was stated during the CC Call that the company has already received close to 2000 LCD screens for the 3rd Q and is expecting a large order to be filled in August. Are you able to give me the size of that order?"
Answer: "Our primary screen supplier has agreed to produce 20,000 screens for us during the third quarter."
Analysis: 20K. Wow. That's a huge order for them.
Follow up Question: From the CC Call: "The environment has changed a little bit in that the primary supply came back and agreed to manufacture more screens, which we availed at the opportunity." It was also stated that "in late Q2 we got a call back through the – from our supplier who had been unable to supply, to say that if a certain number could be ordered, that they would do one last production run."
Should I understand this to mean that the 20K screens is the last order that this manufacturer is going to do in the future? Or just for now? I'm glad that you've brought on another supplier just in case.
Answer: "Our primary screen manufacturer has not created an end of life scenario and future orders are possible. However, the primary factory’s main mission is to build products for Apple and we are sensitive to the possible conflicts that could cause. With a second screen supplier in place, we will have a choice."
My thoughts: This large of an order will fill ALL of their backlog, all of the "regular" orders for existing customers they receive each quarter, all of the requests for sample Somo 650s to demo to prove their compatibility with the discountinued HP 200 series, and all orders from new customers looking to already find a replacement.
Them forcing the debt conversion is a real plus and means they can reform their line of credit with the bank. If the line of credit is large enough, they can then do continuous large orders each quarter that makes it worthwhile for lcd manufacturers to gear up for.
Who knows how this will play out. The thing of it is is that with 7M shares outstanding (with all debt conversion, warrants, stock options exercised) and a high gross profit margin (that will go up with volume), any decent increase in revenue will cause a lot of it to hit the bottom line (especially with the size of tax loss carry forward they have. Enough for years). For 3rd Q, the options and warrants probably won't be counted (and the debt conversion shares only partially), so the outstanding diluted shares should be around 4.5M for income calculations.
I bought more on Monday in the $2 range without hesitation. I actually sold other things that were beaten down to take the opportunity to go after available shares figuring in an up market I would have to pay a huge premium to get them (and just drive the price up on myself). Just last month, one announcement of good news drove the price to $3.75 intraday. Probably was computers doing it, but still.
SCKT...hiring 2 new employees..
http://twitter.com/#!/SocketMobile
Manufacturing Test Engineer and Software Build Engineer.
The company said in the last CC Call that they still very concerned about any increasing expenses and were only going to hire more employees based on the level of growth that occurs. Obviously they are starting to see results to justify new hires.
Dave
SCKT...potential HP market opening up for them.....
A poster who I've communicated with on Yahoo was able to get an idea of the size of the HP Ipaq market that HP has just discountinued (and SCKT is trying to to make their Somo 650 the defacto replacement for it). In 2009 it was $172M, in 2010 it was $87M (obviously decreasing due to HP putting far less effort into it. HP stated all the way back in 2008 that they were going to phase out of the iPaq business---it's why SCKT targeted their SOMO 650 unit as a replacement and oriented 1/2 their business that direction).
I'm sure the market for the iPaq will be reduced in the future, but for businesses to switch away from it means a hardware AND software change AND training costs. That can be expensive. Now that SCKT seems to have their LCD screen shortage problem fixed (they have 20K units coming in early August), they can show the market that they are a worthwhile replacement for the iPaq.
Right now SCKT is EBITDA positive. In 2010 the iPaq market was $87M. Even if SCKT could get $15M from the HP iPaq discontinued industry/year and add in the additional sales of their soon to be "Apple Certified" hand held scanner, revenue could double in the next 1-2 years and profits increase significantly---especially with gross margins of 42%+ and their emphasis on low overhead (it helps that SCKT has a LOT of tax loss carry forward to use).
Recent CC Call: http://seekingalpha.com/article/282016-socket-mobile-ceo-discusses-q2-2011-results-earnings-call-transcript?source=yahoo
Still LOTS of risks and unknowns to play out. At current price it is an interesting stock to say the least.
Dave
10 Bagger....remember 2008/9, one of the biggest problems for VMC stocks was complete lack of buyers. As such, every sell was on the "bid" and kept dropping the prices down (especially on low float companies). I saw some of that today.
I think part of today's drop wasn't just about the economy (or the intervention on the Yen and Swiss Franc), it's also the realization that from the "Debt Ceiling Fight" that just occurred, big banks/Wall St is not going to get bailed out again. The Tea Party isn't going away (the organization is wise at fighting to get their candidate to win the "primary elections" in districts---which few people vote in--that are going to be won Republican no matter what. The left does it too. It's why politics is so polarized now). Heck, Boehner wasn't going to give money for the flooding in Missouri unless their were cuts somewhere. Big bailouts of Golman Sachs aren't going to happen again imo no matter how much they pout.
This risk needs to be priced in by the big boys.
I think people need to get used to the same principal that Japan has experienced..... a long period of very slow growth.
OT--Littlefish. I'm counting on you getting out there and doing some fishing soon! I was riding my bike tonight and saw quite a few fishermen in the Puyallup river. I'm still dreaming about that smoked salmon you promised me!! Heck, I'll even tell you about another company I really like.
bbotcs---weren't you the one who thought AAPL was a good at $80 a few years ago? lol.
SCKT--not worried about approval. The App Software package they released to developers for ipad/iphone was approved through Apple before release. It was stage 1 of the plan. Stage 2 is the release of an Apple specific handheld scanner. SCKT makes GREAT scanners already. Pepsi just bought thousands of their cordless finger scanners. They are highly rated. Apple will approve and allow it to be "certified". Not sure how different this one will be from their other models, but the market/speculators will hype it up.
Last week the stock went up intraday 50% on 50X normal volume on the App Software package. The price peaked and settled back down. I'm sure it'll do it again on the pr next month too.
SCKT may be a good short term flip on that alone, but long term it actually has just as much (or more) HUGE potential on their SOMO 650 replacement of the HP iPaq 200 series. They already are expanding quite a bit in the medical and hospitality fields. Now they will increase their market in businesses who don't want to pay the crazy cost of changing their software. They would just rather buy new hardware that is compatible.
It's a stock with risk but who knows how far it can play out. Here is a link to the transcript of today's CC Call. http://seekingalpha.com/article/282016-socket-mobile-ceo-discusses-q2-2011-results-earnings-call-transcript?source=yahoo
Long term potential: In the Q&A when the caller is discussing $50M/year and $1/year net income, the CFO isn't correcting him.
SCKT..Apple certified hand scanner coming. Just finished listening to the conference call. SCKT released the software package (which was approved through Apple) last week (and it caused the stock to jump 50% intraday) and will be submitting the scanner to Apple this week for evaluation. They expect it to be approved and announced by mid-August or so. It will be "Apple Certified" for the iphone and ipad.
Also, HP is completely out of the HP Ipaq 200 series business. This is still a $100M+/year business with Socket's Somo 650 as one of the few completely compatible replacements. They are starting to receive a lot of inquiries from distributors for product evaluation.
Mike... How do you see lower diesel prices this quarter affecting them? Last Q, they did $36.5M in biodiesel revenue on 8.7M gallons or $4.195/gallon. That was sweet! At fuel prices at that level, IPMN is a fricking cash cow!
But I see now where diesel is currently running $3.69-$4.19 in Indiana (http://www.indianagasprices.com/index.aspx?fuel=D ). It's dropped a bit like everywhere else. Do you know what their wholesale price to distributors is vs retail sales price? (I know the margin for gas stations is pretty slim). Also their cost last quarter for those 8.7M gallons was $29.7M. I know they mentioned they were trying to find lower cost raw stock---have they had any success at that? At a cost of $29.7M it looks like they only need to receive $3.41/gal to cover their supply expenses (assuming similar 8.7M gallons) and anything else starts to hit the bottom line nicely.
Definitely a nice find---a stock to own when fuel prices shoot up.
The company needs to put out an update on any large contracts they've been able to sign with members of the new GPO's they now have access to (they alluded that they were going to do it in the last CC Call & in a response to a personal e-mail I sent). Still waiting though. Management has a bad history of over-promising and under-performing. I think this time they may actually change things for the best, but something concrete to believe in would help out tremendously IMO.
Dave
SCKT ($3.09) 52 week closing high
In the presentation to analysts on Tuesday they mentioned that HP has now listed as "discontinued" their Ipaq 200 series handheld computer in Germany and Australia/NZ. (That's on top of Brazil, India, and Japan in the last few months. By fall 2011, HP should have phased out of this product completely around the world).
SCKT saw their sales of their SOMO handheld computer go from a few thousand to over $500K in Japan alone (during 1rst Q) after HP exited (Their SOMO product is 100% compatible). It is very expensive for businesses to switch their software around and is easier to just keep buying similar hardware.
They are bringing on a second source for LCD screens (they mentioned they are looking at samples this week) and, as such, will be able to catch up on their backlog by 3rd Q and to aggressively pursue opportunities in countries where HP is exiting. (SCKT outsources the production of their products, as such, their SG&A is rather fixed. Management sees gross profit margins going to over 40% in the next couple quarters).
SCKT should be EBITDA positive for 2nd Q and net income positive from then on. That's on sales of $5M/quarter for 2nd Q. It won't take long for them to double that picking up some of the business that HP is leaving from---HP will eventually exit 138 countries. As SCKT picks up this business, their low outstanding shares, huge tax loss carryover, and fixed SG&A should allow net income to grow substantially.
All just my opinion.
NOTE: Shares are hard to come by.
Dave
SCKT ($2.74) A company on the verge of a large turnaround?
After years of being unprofitable, they are on the verge of turning it around this year primarily cause the demand for their two main products is really starting to take off.
1. They make different types of cordless scanners that can be used with smart phones, hand computers, ipad.... (starting to be used more and more in warehouses for product tracking, from medication scanning at nursing homes, to small-business applications, etc). They are very bullish on the potential here.
2. They make a hand held computer, SoMo, that is 100% compatible to replacing the HP IPaq hand held computer. HP's IPaq is used by an incredible number of businesses around the world. What most people don't know is that HP is discontinuing this device and exiting this area of the business completely. They already are out of Japan (where SCKT has already seen new orders picking up quickly). In India and Brazil, the major distributors for the IPaq have it listed as "discontinued" on their websites and once inventory is gone that's it.
SCKT doesn't know HP's phase out schedule but they are figuring HP will be out of it all around the world by the end of the year.
Problems: SCKT would have been EBITDA positive this quarter if they didn't have problems getting LCD screens for their SOMO computers (they have no problems with their scanner products). They think they have the problems solved and can start taking care of a backlog that is getting bigger and bigger each day.
Outstanding shares: around 6M if you add in conversions, warrants, options. What's nice is that the uptick in sales could result in a nice profit/share cause of the low shares outstanding.
The company did $4.0M in 1rst Q cause of delays. They expect to break $5M (and be EBITDA positive) in 2nd Q while just starting to take down their backlog. They were actually discussing being in the $20M+ range this year in the CC call and that they feel they need to get to the $40M range to really pay back long suffering shareholders. The CFO threw out some numbers (in an answer to a caller) based on a $9M revenue/quarter---figuring it'd come in at around 33 cents/share profit.
What I also like about it is that this stock is discussed NO WHERE. You aren't buying in after everyone else. (Though that might change cause the company is in discussions with an analyst about doing a report on their potential).
Are there issues here: Sure. The company needs to become profitable soon or dilution is going to occur (and they know it, but they also know that they are on the verge of it all changing around). The company used to be worth around $160/share long long time ago so (a few reverse splits ago). On the Yahoo board there are a few long suffering grumpy shareholders (though some of them are becoming hopeful).
I posted about it cause I think it has possibilities.
Company website: http://www.socketmobile.com/
Transcript of their last CC call: http://seekingalpha.com/article/265671-socket-mobile-s-ceo-discusses-q1-2011-results-earnings-call-transcript?source=yahoo
Dave
Hweb..DYNT..IMO it's because an investor with a following realized it was a good deal too.
http://siliconinvestor.advfn.com/readmsg.aspx?msgid=27277188
http://siliconinvestor.advfn.com/readmsg.aspx?msgid=27278981
DYNT-$1.38...+35% last two days on 400K shares.
The chart action and realization of future potential has started to draw investors in.
A few weeks ago I gave up completely on Chinese companies. I don't trust them and I don't want to tie my money up waiting on them to go from a p/e of 2 to 4. The US economy is starting to come back again and that will filter to small cap US stocks. As I've gotten back into researching the possibilities (and finding some good ones), I'm coming to believe the real opportunity for money to be made this year is to look in our own backyard. All just my opinion.
Dave
DRJ..$2.18..Now providing custom clothing to 130K diff K-12 schools.
I saw on their Fansedge.com website where you could look up any K-12 school in the US, and custom order school design shirt. Just finished up talking with David Green, Senior VP. He said it's a partnership with Sportwear, Inc and there will be a major pr on it soon (they are in a blackout right now cause earnings are coming out next week. As soon as they get info from auditors they will pre-announce time/date).
Price has been hit hard this week. The ongoing concern with the NFL will way on the stock.
Dave
Timhyma--DRJ---in the 3rd Q CC call, the CEO brought it up and there were follow up questions because in years past they had a problem in building inventory for their big 4th Q due to liquidity concerns. It's one reason they raised $6M last summer in a deal with William Blair Small Cap Fund (he got a good deal). That was necessary to allow them to get a new 3 year line of $20M credit with Regions bank at Libor + 3% (effectively reducing their quarterly interest payments from $450K/Q to $220K/Q)
In the CC call they said that as of 9/30 they had drawn upon the line of credit to $16.5M and figured it was drawn upon completely by the CC call. However, he said they weren't even concerned (unlike in previous year) because they were seriously cash flow positive in the 4th Q. (My estimate puts EBITDA around $13M for 4th Q).
In the CC call they also think from here on out they will remain EBITDA positive even in their weakest quarters (Interest and Depreciation now run around $800K/Q) and that, barring a major acquisition, they weren't worried about raising any more capital or have liquidity concerns for the future.
If the NFL is canceled for a whole season, that's a different ballgame. I don't see that. April 6th is the players trial on breaking the lockout. After that is resolved, they will start to negotiate. No one wants to ruin a $9B/year cash cow for the players and owners. It's gotten to be way to big to spoil.
In the Q&A there it came out that the NFL segment provides 35-40% of their business, but by 2012 with the number of colleges they are in negotiation with on taking on that they see college football being their biggest business segment.
For a $100M market cap stock, it has 4 analysts and bloggers following it. It's not going to be a quick mover IMO, but will move upward slowly as their business plan continues. It should garner a high p/e for their e-commerce business and growth rate (they do have the brick-n-mortar businesses but the CEO makes it clear that they are there to enhance the fansedge.com website, not to be a normal store just to do business in. It's more the kiosk idea and it's expansion that plays into it. If their kiosk trial period with JcPenney pays off---they already seriously increased JP's online sports wear website since they took it over--and they are allowed to expand to all 1100 stores....well, then, that will be a major pr to say the least).
Earnings will be released next Monday with a CC call. After that, a lot of questions will be answered and direction forward clarified. You may have to pay more per share, but concerns/risks should be reduced (other than the NFL).
Dave
DRJ..$2.35..Dreams, Inc
This is currently the approx. 170th largest internet retailer ($85M this year having grown 40%). They sell sports clothing and memorabilia through Fansedge.com. They also run 70 sporting websites for others, including Walmart, JcPenney, Sears, Chicago Bulls, Washington Wizards, San Diego Chargers, Philadelphia Eagles, the University of Miami and U of Texas, plus more. They have already said they are going to do $60M in the 4th Q (and I estimate they will beat earnings forecast of 14 cents).
They have 3 business division:
1. Where they do promotions with individual athletes (about $2M/year n revenue).
2. Manufacture cases, frames, boxes for sports memorabilia (about $11M/year in revenue).
3. Retail operations. $85M from their e-commerce site, website syndication, and $12M or so from 9 stores (8 in the Chicago area and one at the University of Oklahoma they inherited as part of another deal).
A few highlights of recent developments:
There stores are not the normal "brick and mortar"--they are designed more for use of their kiosks that send business back to their website. They see the kiosk as a real growth factor in the future. They just started a pilot program with the kiosks in 120 JcPenny stores with the idea of expanding out to all 1000.
They are making a big push to get into selling all fans clothing/memorabilia for individual college teams. They started with the University of Miami and Texas and plan on expanding from there quite a bit in 2011.
They plan on getting quite a few more NBA teams and NFL team's sportwear websites.
They just purchased a clothing manufacturer in November. They plan on cutting out the middle man for all the college teams they sign up in the future and being the manufacturer and distributor for all their fans apparel.
They closed on a secondary last summer and a new line of credit this fall. They feel that with them being cash flow positive from here on it that, baring a large acquisition, they don't need to worry about raising any more funds.
Their earnings are weighted heavily to the 4th Q. They were EBITDA positive for the first time in a quarter (that wasn't the 4th) this fall (if you back out the one time costs for the refinancing and stock sell). They plan on being EBITDA positive from here on it in the future.
STRENGTH: They are making a big play in building up their e-commerce site. They are increasing their website syndication by making a push to take over the contracts of major professional and college teams sports websites in the U.S. and increasing their sales dramatically. They plan on integrating their manufacturing process more into the equation to reduce costs even more. Their kiosks (whether in more of their own stores or in the connections they have with the major retailers) will aid their expansion.
CONCERN: Their number one source of revenue is the NFL. Obviously if there isn't a season it will cause a revenue hit. Won't last forever though since the NFL isn't disappearing. The stock hit $3.11 on Feb 9th after the JcPenney kiosk deal was announced. It's pulled back to $2.35. Earning will be released on March 28th (announced during the Roth presentation).
That's just a summary of things. I'm too lazy to write it all up. Here are some links to make it easy for you to research more if you desire:
http://www.fansedge.com/
Roth Presentation http://www.wsw.com/webcast/roth24/drj/
Last CC call http://www.visualwebcaster.com/event.asp?id=74230
JcPenney kiosk deal http://www.proactiveinvestors.com/companies/news/12169/dreams-expands-offering-with-launch-of-jc-penney-in-store-kiosks-12169.html
Press releases of all the deals they have with major retailers and sports teams: http://www.dreamscorp.com/pressreleases.htm
TELT.pk is where it's at now on Yahoo.
bbotcs--DYNT--- listen to their last CC call. It is very interesting. A caller came on and asked 6-7 TOUGH questions including internal projections. The CEO answered most of them. I'd say part of it was "hype" but the CEO wasn't throwing this info out on his own. It was only as follow ups to the questions.
Highlights:
-- They are not selling to the GPO (as a whole) as a contractor supplier (ex. supply towels to all the members), but instead have been approved to directly contact and sell "capital equipment" to each member of the GPO. The have also been approved for "supplies" with one of the GPO's but the competition there is tough.
--For their "niche" of equipment, their only real competitor is Patterson Medical (A subdivision of PDCO---Nasdaq) that does $110M/year. Patterson has been the exclusive supplier of capital equipment to the members of these GPOs for almost 2 decades. One of the reasons is you need to be able to supply a large selection of products and most suppliers in this industry can't do that (DYNT couldn't either for the longest time. They teamed up with another service company here to accomplish it). Company feels they can compete and capture business since they are also a manufacturer/distributor/and have direct sales force (They and Patterson are the only two with that capability in their niche). Back in Feb during the call they figured members may want a choice now--from latest pr "better reception than we expected" it sounds like it's a possibility.
--Their margins on "capital equipment" are already 50% or greater so selling at a discount to that still is ok.
--This product they just partnered up with in December called "Stream"--it sends reminder texts and e-mails to patients is VERY PROFITABLE. In the first two months they signed up 200 businesses. That is worth $1800/year/customer for the next three years to DYNT (ie. Each customer signs a 3 year contract that costs $399/mo. DYNT cut is $150 and they do NOTHING else. The other partner runs the software and does all the work. DYNT uses their connections to physical therapists and chiropractors to sign them up. (Again, that's $360K/year/3 years for just the first 200 customers signed in the first 60 days offered). The reception they received on that so far is high satisfaction.
--Internal projections if things go as planned.....they expect to increase sales by millions, enough so that they feel they can eventually be able to have pre-tax profit margins on revenue in the double digits. (EX. Right now they earn squat on $8M/quarter. That means doing $1.3M pre-tax profit on $13M/quarter. These last numbers are mine to just show as an example of what I'm talking about.)
The caller grilled them hard and a lot of answers came out. I hadn't listened to this call until last night. Makes me more interested in the future--that management may FINALLY have a plan to bring it together. I need to get off my fanny and call the company to get some of my own questions answered.
Go to "February Conference Playback"
http://dynatronics.com/CompanyInfo/PressReleases/tabid/184/Default.aspx
DYNT..$1.04..strong future potential w/140K new business customers.
--The stock just hit a 52 week high today at $1.10. (on Nasdaq CM)
--13.4M shares outstanding, 8.67 float
--Insiders own 35%. Little institutional ownership
--Company is profitable. Fully taxed. Revenues flat the last several years but may change dramatically here soon.
--Small insider buys recently.
--Company started a $1M buyback in February (and actually has purchased shares) to get them back to Nasdaq compliant (above $1) and also because CEO thinks stock is very undervalued for future with new business on horizon. They are borrowing money against their line of credit to do so.
--Low debt (Long term debt is $2.5M. Primarily mortgage on offices building in Utah and plant in Tennessee). (Line of credit debt is $2.4M and decreasing---lowest level, according to latest 10Q, since 2007)
--Salaries (including bonuses) are reasonable at around $200K for CEO and VP, $100K for CFO on a $32M/year business.
Why buy??
The company manufacturers around 70 products at their Tennessee plant (and sells hundreds more) for the physical medicine and aesthetics industry (ex. physical therapists, chiropractors, dermatologist, rehab...) For years they just putted along---didn't even have a comprehensive catalog. Last year they started to get aggressive and created an e-commerce website to bring all their products together (within 90 days over 20% of their business came from it). After that they went after signing GPO's (Group Purchasing Organizations) which they had failed at in the past. These are the major buying groups in the industry. There are 6 total in the industry and they were able to sign contracts with 3 of them!! (starting March 1rst, 2011). These organizations will allow DYNT to serve their 140,000 business members that DYNT did not have access to before (one of the requirements is an e-commerce site to accommodate easy ordering for their members). CEO is very excited that this is the game changer for the company.
DYNT's administrative costs have been very consistent the last few years. An increase in revenue could potentially allow the bottom line to grow rather quickly (especially for a stock with just 13.4M shares outstanding (or less as buyback continues).
Can DYNT get the business?? From their latest 10Q: "one of our primary competitors, closed its Chattanooga Group operations in the quarter ended July 3, 2010.....This essentially eliminated Empi as a significant catalog competitor and further reduced competition in our market. "
Also.... "These consolidations combined with other consolidations and continuing declines in the number of independent distributors have significantly narrowed distribution channels in our market. At the present time, we believe that there remain only two companies with a national direct sales force selling proprietary and distributed products: Dynatronics and Patterson Medical. All other distribution in our market is directed through catalog companies with no direct sales force, or through independent local dealers. However, the network of local independent dealers is rapidly diminishing due to consolidation efforts and increased competition from Dynatronics, Sammons Preston and catalog companies. In the past year, we have reinforced our direct sales team to include over 50 direct sales employees and independent sales representatives. In addition to these direct sales representatives, we continue to enjoy a strong relationship with scores of local dealers. We believe we have the best trained and most knowledgeable sales force in the industry. The recent changes within our market provide a unique opportunity for us to grow market share in the coming years through recruitment of high-quality sales representatives and dealers."
Bullish comments by CEO in latest pr: http://finance.yahoo.com/news/Dynatronics-Signs-Third-GPO-prnews-3859342293.html?x=0&.v=1
CEO letter to shareholders in 2010 http://www.dynatronics.com/CompanyInfo/LettertoShareholders/tabid/139/Default.aspx
I haven't posted in a long time but thought I'd share.
Dave
CNAM Nice little insider buying today. http://yahoo.brand.edgar-online.com/default.aspx?cik=1410711
Continuation of previous post:
In the 2nd Q they processed and sold 10K tons of scrap for $3.9M (that comes out to selling it for $390/ton, and probably purchasing it in the $350 range).
In the 3rd Q they processed and sold 26K tons of scrap for $9.7M (that comes out to selling it for $370/ton, and probably purchasing it in the $350 range or less).
At the end of 2nd Q (Sept 30th), they stated in their 10Q they had $8.5M in scrap inventory. That's scrap they never sold in 3rd Q. That equates out to 24.3K tons (because they would price their inventory at their estimated $350 purchase price).
In late December they state they sold 25k tons for $12M (or $480/ton). In late Nov and esp December prices went up fast!
That means they sold all of their Sept 30th inventory plus a little more. (It also means they sold it for a great profit margin).
In the 3rd Q 10Q they state "In addition, we have taken advantage of current low prices of raw scrap metal to build up approximately $8.5 million of scrap metal inventory in anticipation of price increases in the fourth quarter of 2010 and, depending on the effects of government imposed energy restrictions, in 2011."
They nailed that! Now if they continued to build up their inventory levels in October, November, early December than they have a nice profit just waiting to be sold now that shredded scrap is going for $510/ton and predicted to go up. If their average price (especially if they bought in Oct and Nov) is low than they can make almost $100 profit per ton sold in 1rst Q!!
Hopefully management had the foresight to buy hand over fist. I doubt it, but crazier things have happened.
The company has a long ways to go to truly rejuvenate interest in the stock long-term. It's not just starting from scratch, but from a negative perception (ex. there are a LOT of investors on iHub that cringe if you even mention the stock). But the last 3 pr's have been clear, concise, and positive (but not overly). We now have a benchmark (ie. we generally know what they were able to do in the 4th Q even with all the energy restrictions) and can gauge 1rst Q by it.
I still think the stock will be $8 by May's CC call for 1rst Q. Not because I drank some funky Kool-aid, but because in the last 10Q report they mention that they were building up scrap supplies for what they felt was an approaching price increase. They nailed that prediction. Hopefully they had a lot of scrap inventory lying around on their 32 acres (that had been purchased in Oct/Nov/early Dec) cause the profit margin (with shredded scrap going for over $500+/ton now) on that is probably 20%+.
Value1008..CNAM..I do have to say that I've found Ted to be one of the best IR people I've dealt with in getting back to me. I already received a short response back from him:
"Thank you David. We look forward to a successful Q1."
My original e-mail from about an hour ago:
Hi Ted--
I appreciated the press release today on CNAM reminding people that the company was under severe power restrictions for the 3rd and 4th Q (and now are lifted from them. As are all the steel customers CNAM sells to too). It's not earth shattering company news, but it is nice that you are keeping us well informed of what is going on.
If this pr is followed up later with actual solid production numbers showing the ramping up of operations for the recycling business, then I will owe you a beer (at minimum) next time I'm in California! That is the kind of step-by-step story telling that could easily make CNAM a $10 stock.
Again, nice job on keeping us informed. I look forward to the next announcement.
CNAM...Investor Relations...I sent Ted Haberfield another e-mail today telling him I appreciated the update. The new Investor Relations firm has done a good job IMO. It wasn't earth-shattering news, but it is a good reminder to everyone that CNAM's problems aren't all of their fault (though there are those who will question that, I being one of them somedays).
The other point I brought up is that I am expecting a press release like today's (i.e one that highlights "potential" again versus actual "completion") to be followed up later this quarter with an update on monthly production numbers SHOWING the ramping up of recycling production. That kind of step-by-step story telling will continue to build confidence in this stock.
Dave
Viking...."escape from the internet"?? Oh, I like that idea!
At least the high volume means we are churning through the float and setting ourselves up for a move higher on the next positive press release. It would be nice for the stock to close above $4.20 resistance but compared to the $3 early last week I'm not complaining at all.
Viking..CNAM..so what do you make of the volume/price? Obviously it's part of the China metal push (though I didn't know iron was a "rare metal" lol). Not complaining though.
I thought the price at $3 was undervalued for the potential. I think it's about appropriate now. I will dream of $8 tonight and my hitting the sell button :0)
I've talked to the new Investor Relations/Ted Haberfield a couple times (and wrote him several e-mails, which I've gotten short responses to) not necessarily asking for details on how business is going (what's he really going to tell me?), but to emphasize how destructive management's outlandish revenue projections were in 2010. CDII encouraged them to put out pr's that were projected on the most optimistic scenario and not the "underpromise/over perform" type that Wall Street loves. This company needs to back up what they say or else no one will trust them.
On that note: I'm glad to see in the last 2 pr's where they have kept us updated, showed some optimism, but kept their bull$#%^ to a minimum!
Viking...CNAM...now you just need to e-mail Worden again and tell him CNAM needs a real auditor (then, when we get that, you can e-mail him and tell him we need smarter management!)
Viking...the earnings report will be interesting to see---was management even on target for 8M/140M for the year (based on 3rd Q results). If they come out with some lame numbers for 3rd Q then you know they were never going to make it in the first place and this latest set back is questionable.
Starting to have my doubts.