Franklin Wireless Corporation (FKWL)

[Knowledge is King]

Bought some FKWL @$2 today...


The stock made a new 52-week high today on reaction to an eye-popping NT 10-K filed after the close on Friday. Specifically,

The Company’s net sales for the year ended June 30, 2012 are expected to be approximately $24 million, as compared to net sales for the year ended June 30, 2011 of approximately $46 million. The decrease in net sales was due to several factors, including increased competition in the dual-mode (3G and 4G) USB modem market, as well as competition from other similar products, which negatively affected volume and price. Sales during the year ended June 30, 2012, were also affected by delays in launching new products. During the year ended June 30, 2012 the Company was developing new products that are expected to be released during the first half of fiscal 2013.

Sounds lousy until you realize that FKWL had sales of just $8.8M through the 9 months ended 3/12. That means that Q4 revenues were over $15M alone (vs less than $5M in Q4 last year)! I estimate that FKWL made EPS of $.12+ on those $15M in revenues.

Looking ahead, over the next 3 quarters the company has 3 easy comps, with losses in each of those 3 quarters.

Finally, last Thursday the company announced that it had bought back a 1.5M block of stock from a disgruntled shareholder group @$1.84 share. This will give a nice boost to EPS going forward, beginning in Q2 FY13.