Commentary to me sounded like a comparable year coming. A drop in the household area which is 50% of business while they bring out new products, but then in the high margin area, you have these comments:
Electronic components:
We anticipate that unit volume will decrease in fiscal 2011 when compared to fiscal 2010. However, the sale of higher pixel
count units in fiscal 2011 and beyond will increase operating margins
EMS:
As discussed elsewhere in this annual report, we expect to make significant capital investments in the expansion of the EMS
business in order to double production capacity. Once the expansion is complete, we will have the capacity for up to $25 million in
annual sales. Assuming the timely completion of the expansion, we anticipate that revenues in fiscal 2011 will increase significantly
when compared to fiscal 2010, as we are unable to fulfill all customer requests at current capacity. However, an increase in sales will
be partially offset by increased labor costs and expansion of dormitory space for additional personnel.
A jump from $9 million to $25 million is significant and will likely offset any fall in the household area. Also, consider the fact that they expect a fall in the area that produced 6% margins last year, and a big jump in the EMS area that produced 21% margins (even if that slides some due to above mentioned issues).
The bottom line should be just fine.
AI
