Replies to post #44 on Audiovox (VOXX)

[littlefish]

Never listen to management as a foundation for investment thesis unless you are a share flip pumper. Look at the business, the history, what is holding things back, etc... the chairman here is a blowhard that gets to stay that way because he controls the company. He also has built a bigger and better business over time in terms of creating good jobs and hiring people. They've glided away from distribution to more vertical integration with US manufacturing of stuff like rear seat infotainment in Naples or Klipsch speakers in Indianapolis.

The real problem is this is a competitive business where obsolescence and reinventing products is constant and management constantly remains over optimistic and slippery when it comes to being up front with investors. The other problem is their overhead needs to be reigned in if John wants to see the public take their share value more seriously. They've taken a profitable mid teens GMs business roughly a decade ago and turned it into a mid-high twenties GMs biz that loses money.

These problems I think begin to become outweighed by the underlying business potential in near and mid term if they can avoid too much inventory hold on the balance sheet (something that came up in comments on CC that a major customer is putting inventory risk more on the company).

Right now peeps see a mngmnt team that is not forthcoming nor visibly looking at direct shareholder value enhancement so they're penalizing the company's value. I personally think once Q3 gets reported in January next year that people will see the engine light more clearly even without Hirschmann. Outta time, will try to type more eventually. Good luck.

All IMO only, hope that wasn't disorganized rambling on the fly.

[littlefish]

If John was smart, he'd quit the lip service about company being undervalued and would institute a share buyback with no fanfare and try to get shares out of circulation on the cheap if he actually thought the company could generate good cashflow and earnings with current business. If they could somehow get Eyelock in a position to be funded thru a partnership or something that would immediately help their cash flow and bottom line, Eyelock burns somewhere upwards of $15+ mill a year and that's pretty huge for a company with a market cap of roughly 10x that amount.

After the sale, I'm modeling them to have roughly $200+ mill in tangible assets with some ARs and inventory becoming cash (although hard to know how much AR and inventory are wrapped up in the deal so it's a guess).

If you give back the $15-$18 mill burn Eyelock puts on them, you'd be looking at a decently profitable company with cash on hand, no debt, trading under tangible book, valuable properties, with GMs in the mid-high 20s and having some manufacturing capability moving forward for expansion of some of their OEM automotive products.

There's always risk but seems like it's mitigated with the sale in Q2 probably being realized to pad the big hiccup from hhgregg bk and customer changing inventory algorithm in front half this year, and a clean balance sheet with strong Q3 coming after that and at front end of some decent OEM work (often higher margin early on in mutliyear contracts so could carry for 12 months or more with Ford and GM work potentially plus other programs post Hirschmann).

Plus we could have meaningful news on Eyelock and Qualcomm working together with the snapdragon 835 processor in the next month or so potentially.

All IMO only.