Intouch Insight Ltd (INXSF)

[littlefish]

Doesn't it seem a bit counterintuitive to not recognize any gross margin improvement until the very last customer is switched over?

Shouldn't the company be gradually switching customers from lower margin SI to higher margin INX.V contracts as time goes on and therefore represent at least a bit of margin improvement the higher the % of SI customers get switched over (i.e. hint at sequentially improving margins)?

Certainly some cost saving benefits won't hit until the very last customer has switched over but thought we'd get a general trend upward as well with margins so I was a little bit disappointed to see them slip back a bit.

I suppose there may be some seasonality and/or lumpiness Q to Q and there is some variation of margins within the differing operating segments too.

At any rate, the filing should put a little more light on things.

Margins difference definitely could be from a bit of lumpiness and the real cost saving benefits won't hit until 2nd half 2012.

But I was hoping we'd see a creep upward in margins as migration continued from SI to In-Touch not downward.

It is just one Q and not like it was a big miss or anything. Revs improvement continued strong YOY and they still made money.

Thanx for the thoughts. Stock still seems quite cheap. Starting to find a few of those around these days LOL.