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.
