OVERVIEW
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- - - - - OVERVIEW on Smith Corona Corp (NASDAQ: SCCO) - - - - -
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- - - - - COMPANY - - - - -
TICKER: SCCO (NASDAQ)
Smith Corona Corporation
842 Bennie Road
Cortland, NY 13045
Phone: (607) 753-6011
Fax: (607) 753-8769
TRANSFER AGENT:
HSBC Bank USA
Corporate Trust Services
140 Broadway, New York, NY 10005-1180.
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- - - - - - - - - - SHARES INFO - - - - - - - - - -
OUTSTANDING SHARES: 3.1 million
FLOAT: 2.1 million
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- - - - - - - - - - SEC FILINGS - - - - - - - - - -
sec.gov
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- - - - - NEWS & CHARTS - - - - -
snap.com
quote.yahoo.com
goprofit.com
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- - - - - - - - - - BACKGROUND - - - - - - - - - -
- NEW DIRECTION - Here's what SCCO has done...
* Brought in new management;
* Got rid of unprofitable products;
* Cut out excess overhead costs;
* And focused on improving gross margins.
* Designed new typewriters with new features that fuel the profitable supplies business.
* They've even started selling PCs to the Government.
* Partnered with Vanstar/Inacom (World's largest independent technology services company).
* Partnered with Office Depot (World's largest retailer of office products).
Could this be just what SCCO needs to become a major turn-around story in the technology industry?
SCCO sustained substantial losses in recent years and has been the “doormat” of the technology industry. It even went through Chapter 11 bankruptcy in 1995, but emerged from bankruptcy in 1997.
In September, 1998 the Company reevaluated its strategy and determined that they needed to improve their performance and that meant changing their focus from that of a manufacturing company to one of a sales and marketing company.
- NEW MANAGEMENT
A new CEO was hired along with other key officers to implement a new strategy to return Smith Corona to profitability.
smithcorona.com
snap.com
- NEW STRATEGY
The new strategy of becoming a sales and marketing company meant a manufacturing workforce reduction of 130 people (about 57% of total workforce), relocation to more efficient facilities and reducing certain targeted costs. The reduction of these expenses is expected to save the Company about $9 million annually.
The strategy has taken most of the last nine months to put in place. Losses through the 3Q of this year (Jan-March, 1999) were primarily associated with a write-down of obsolete inventory and the costs of
severance for 130 manufacturing related employees.
The Company continues to refine its business plan and believes it can strengthen its global business by expanding its sales capabilities and by revising its marketing programs.
Smith Corona is eliminating unprofitable and obsolete products and intends to focus on printed document production. Accordingly, the Company is negotiating with numerous suppliers to expand existing product lines and develop new product lines in speech recognition products, a full line of inkjet printer supplies and digital photo printers and supplies. The Company anticipates introducing the first of these newly sourced products in the first quarter of fiscal 2000 (began July 1, 1999). They also consider the typewriter market, valued at $100 million, to still be viable, especially when linked with the supplies market for typewriters and attendant products.
Earlier this year, Smith Corona also started selling PCs to the Government through its schedule contract and its exclusive partnership with Vanstar Corp. (formerly NYSE: VST but they recently merged with
Inacom - NYSE: ICO).
206.144.247.65
vanstar.com
inacom.com
In addition to Vanstar (Inacom), Government buyers will also find Smith Corona's PCs on the GSA schedule and through reseller Native Technologies Inc.
nativetech.net
- CURRENT TRENDS & RESULTS
The Company intends to build and expand its domestic and international distribution network.
Through the 3Q of 1999, newly sourced net sales for the nine-month period were up 185% over the same period in the prior year, but profitability was negatively affected by clearance sales of unprofitable low-end telephony and facsimile products. The clearance prices caused a very low gross margin, but since those products are gone, 4Q results (ended June 30, 1999) are expected to show an increase in gross margins.
The Company reported that they hope to realize the benefits of this fundamental change in its business focus during the 4Q (Apr-June, 1999). The results of that quarter are expected to be out soon.
They would normally put them out by the end of September. However, rumor is that the Company will be announcing those results quite early.
- OTHER NOTES
SCCO has a $5 million letter of credit and says they are fulfilling all the requirements of their lenders. The Company believes that its cash and borrowing capabilities will be sufficient to meet its operating cash and capital expenditure requirements in the foreseeable future.
The Company has recorded a liability of $1.8 million related primarily to remediation and monitoring of environmental sites from the Company's past handling and/or disposal of hazardous substances. SCCO has already set aside what they believe are adequate reserves for the payment of expenses for the ongoing remediation programs of these sites.
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- - - - - - - - - - OFFICE DEPOT CONNECTION - - - - - - - - - -
On July 21, 1999, Smith Corona announced a licensing agreement with Office Depot (NYSE: ODP) for various office products under the Smith Corona brand name. “Office Depot is pleased to partner with Smith Corona, one of the most respected business-machine companies in the world, to offer a variety of top-quality office products to our customers whether they shop in-store, online or by catalog,” said Charles Tyson, vice president and divisional merchandise manager for Office Depot.
Office Depot, Inc. is the world's largest seller of office products, selling through nearly 800 stores, plus on-line and catalog sales. Office Depot has expanded its presence overseas by acquiring Viking Office Products, which sells office products internationally through catalogs.
Smith Corona is introducing “new products” that will be branded for Office Depot independent of other Smith Corona products marketed by Smith Corona.
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- - - - - - - - - - OTHER RESEARCH SITES for SCCO - - - - - - - - - -
www1.wsrn.com
investorguide.com
schwab3.marketguide.com
dailystocks.com
lightstream.com
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- - - - - - - - - - SPECULATION & RUMOR - - - - - - - - - -
1) Rumor is the Company is planning on announcing earnings for the 4Q earlier than expected. Perhaps as early as mid-August (instead of the usual mid-September).
2) If the earnings report comes out early, could it be because the news is good?
3) The Smith Corona brand name is very well known. Is it possible that a turn-around with this company might catch more attention, quicker, because of that name recognition?
4) If sales of PCs to the Government has started, might that be reflected in the 4Q report?
5) The Company's most recent 10Q showed the Current Assets vs. Current Liabilities Ratio at 1.49 to 1 and it showed that the Company had about $5.9 million in Cash. This, along with their $5 million Letter of Credit appear to be substantial in meeting their cash requirements, especially considering the fact that they have 130 fewer employees to pay than they have had in the past. Could profitability be a possibility?
6) With $47 million in annual sales and the prospect of increasing those sales through Office Depot (in-store, on-line, and via catalog), along with the reduction in overhead expenses (projected by the Company to be about $9 million per year in savings), I wonder if they could achieve perhaps even just a 3% to 5% Net Profit?
7) With only 3.1 million shares outstanding, the Earnings Per Share (EPS) could be significant with a 3% to 5% Net Profit. And the Industry Average Multiple for profitable companies in this Industry is about 28 times Earnings.
8) I am glad to see Office Depot (largest office products retailer in the world) interested enough in the “new products” from Smith Corona to sign a licensing agreement. I wonder what those “new products” might be and what it is about them that interests Office Depot?
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It is difficult to speculate what price this stock might be at any time in the future.
This, like most stocks, is risky. If SCCO “hits,” the return could be substantial. But regardless of how high the potential return might be, there is always risk of losing part or even all your money. I am not a professional advisor and I don't get paid by anybody to do this. I just like this stock and I bought shares in it. So if anybody buys this stock and loses, remember, there are never any guarantees. By the same token if anybody buys this stock and makes lots of money, it doesn't necessarily mean the next stock I like will do as well. I can be wrong just like anybody. YOU have to determine what works best for you.
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Talk to your Broker or Investment Advisor and get as much information as possible. Do your research EARLY to help you make more informed decisions later.
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Good luck!
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