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Cary,
I met with Michael Koss earlier this week and here is some feedback for the questions you asked. Also, you'll want to look at my post back to Steve Patterson regarding his questions for additional insight on this company.
(1) No, they don't have any current plans to promote their stock to individuals or institutions. Michael has seen that the value of the stock is not necessarily correlated to the earnings or any other solid value and doesn't feel like it's worth his time to promote the company that way. He feels his best efforts can be spent increasing revenues and earnings. After meeting with him, I agree. They are doing a good job of making the company more valuable and as long as they increase earnings and book value, Wall Street will eventually follow.
(2) In tandem with #1, no they don't plan to have more investor information on their website. They feel that the information is available through other resources (such as Edgar) and since the company isn't widely followed, it doesn't make sense to spend efforts in that direction.
If you want specific questions answered, Michael said that you could e-mail him directly. His e-mail address is mkoss@koss.com. He is a very personable individual and I believe that he will respond to any direct questions you ask.
(3) & (4) In answer to the outlook for growth, see my post to Steve for some answers to that question. Koss doesn't have specific annual percentage increases planned, but, with the combination of increasing revenue, increasing gross margin, buying back stock and increasing royalty revenues, I could envision a 20% - 30% increase in earnings for the next 2-3 years. There is risk, however, because of the size of the company and the difficulty of projecting ahead. But I don't feel there is too much downside from the current price.
Michael also didn't rule out the possibility of future acquisitions, but there are none currently under consideration.
In general, I was very impressed with Michael and his knowledge of the company and where they are headed. This is a family business and he has seen it from the early days. This gives him a tremendous sense of historical perspective.
I also met his brother John (Jr.) who is in charge of sales. I was impressed with his demeanor as well. Koss has a great marketing strategy of "overdelivering value" at all price points and "one to one marketing." A future vision Michael sees is to use the internet as a place for customers to "custom order" headphones and the Koss will make them for that customer and ship them out the next day. This would be sort of the "Dell" of audio headsets.
After the trip, I am more bullish than I was before. However, this company will continue to be misunderstood by Wall Street and not widely followed. This will mean the current spreads may well continue and this is not a "trading stock." This is a "buy and hold" for 3-5 years. IMHO.
Rick |
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