| "Emerson Radio Corp. is one of the nation’s largest volume consumer electronics distributors with a well recognized trademark in continuous use since 1912. It is one of the oldest and most respected names in the consumer electronics industry. The company designs and markets internationally full lines of video products that include televisions, video cassette recorders (VCRs) and Digital Video Disc (DVD) players, audio products, microwave ovens, home theater, high end acoustic products, office products, mobile stereo and wireless products. Emerson distributes its products primarily through mass merchants, discount retailers, and specialty catalogers and, to a lesser degree, on the Internet. The company uses an extensive distributor network to facilitate its international presence and further leverages the Emerson brand globally through various licensing agreements. Its core business consists primarily of the high volume distribution and sale of various low to moderately priced product categories. In FY 2000, Walmart accounted for 55% of net sales and Target 21%.
Emerson recently developed CinemaSurround™ using a sophisticated patent pending technology that transmits audio sound to speakers without allowing the dialogue to drift into the left or right channels, a problem that plagues traditional home theater systems. The system includes a single powered bass module, that provides the thunder and houses all the amplification needed to power the rest of the system. Also included are one center speaker, one rear speaker with level control, and two Micro Satellite™ left and right ambient speakers. These Micro Satellite™ speakers are so small that they let the consumer hide the speakers in a bookcase, a potted plant, or in just about any existing furniture in a room. Emerson Research believes that although most consumers appreciate movie theater-quality sound, the large, bulky speakers of a conventional system detract from the decor of their living room, bedroom or den. Additionally, the CinemaSurround™ amplifier and connections are all in the sub woofer, which can also be hidden so the entire system is virtually invisible.
This amazing technology delivers movie theater quality sound from an invisible system that costs a fraction of traditional home theater systems. CinemaSurround™ is now being sold around the world including the U.S., Germany, South America, the U.K., Switzerland, and France. First introduced in January 1997, at the Consumer Electronics Show, CinemaSurround™ has been well received by retailers and it has the potential to become Emerson's number one selling product in this newly-developed high-growth market. The CinemaSurround™ system stands to become the hallmark of new technology in the $755-million home theater market.
On February 13, 2001 Emerson Radio reported fiscal 2001 third quarter financial results. For the quarter ended December 31, 2000, operating income rose to $5.6 million, an increase of 159% from $2.1 million in the comparable period a year ago. Net income totaled $3.7 million, or $.10 per diluted share for the quarter, compared to net income of $1.1 million, or $.02 per diluted share in the third quarter of fiscal 2000. The increased earnings per share resulted from higher net income and a reduced weighted average number of shares outstanding. Net revenues totaled $60.1 million, compared to $61.3 million in the prior year's third quarter, resulting primarily from customers shifting their orders into earlier quarters in order to assure additional product availability throughout the year. Gross margins expanded strongly to 20.6% for the quarter ended December 31, 2000, up from 13.6% in the comparable period in the prior year.
Emerson also announced that for the nine months ended December 31, 2000, the company reported net revenues of $239.8 million, an increase of 49.6% from $160.3 million in the prior year's nine-month period. Operating income totaled $16.4 million in the latest nine-month period, an increase of 274% from $4.4 million in the comparable period a year ago. Net income was $11.9 million, or $.30 per diluted share for the nine months ended December 31, 2000, compared to net income of $2.4 million, or $.04 per diluted share in the prior nine-month period of fiscal 2000.
Dirks & Company of New York, NY recently initiated coverage of Emerson Radio Corp. with a “Strong Buy” recommendation and FY 2001 and 2002 EPS estimates of $0.25 and $0.42, respectively. They also have an 18-24 month price target of $6-8 per share. Stevens R. Monte, CFA, special situations analyst at Dirks & Company, has over 36 years of Wall Street experience analyzing publicly traded companies, with a current focus upon under-valued/under-followed companies. Emerson Radio Corp. was recently ranked the #1 consumer electronics company by Investor’s Business Daily, a national financial newspaper with a daily circulation of 800,000.
Emerson Radio Corp. is also owner of 48.3% of Sport Supply Group, Inc. of Dallas, Texas. Sport Supply Group, Inc. is the largest direct marketing distributor of sports-related equipment and leisure products to the institutional market in the United States. The institutional market is generally comprised of schools, colleges, universities, government agencies, military facilities, athletic clubs, athletic teams and dealers, youth sport leagues and recreational organizations, Major League Baseball, Little League Baseball. Sports Supply Group owns, directly or through license agreements, brand names which are highly recognized and include the following: Voit®, MacGregor®, Huffy®, Alumagoal®, AMF®, ATEC®, BSN, Champion, Flag-A-Tag, Maxpro, U.S. Games, Port-A-Pit, New England Camp. Emerson stands to gain from this strategic alliance by diversifying from its core business of consumer electronics distribution to another distribution business that offers excellent growth potential at more attractive gross margins. The company is also creating strong synergies from cost sharing, combining overhead and administrative costs, and creating certain distribution and sales channel synergies.
With a P/E ratio of 4 and a ROE (Return on Equity) of an incredible 43% Stockprowler.com views MSN as very undervalued. The company is reaping the benefits of the introduction of new products, expansion into toy and specialty distribution markets, and the association with recognizable brands. Emerson expects revenues and earnings will continue to increase in the coming quarters. MSN closed Friday at $1.33 cents up 6 cents on volume of 28,200 shares. Stockprowler readers are urged to visit the company web site for further information… emersonradio.com. Stockprowler.com does not receive compensation from companies profiled or from third parties associated with the companies profiled. Readers are urged to read the company SEC filings and do their own due diligence before investing in this or any other stock."
...reprinted from Stockprowler.com (4-8-2001) |
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