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Strategies & Market Trends : The GUMMMy Bear Squad touting Gum Tech (NASDAQ: GUMM)
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To: DanZ who wrote (85)12/30/1999 2:03:00 AM
From: Mad2  Read Replies (1) of 207
 
Dan;
GUMM needed to jump start the publicity of ZICAM for the 99/00 cold season which is why they got the word out about the AJIC article before it was actually published. It worked and a number of news organizations picked it up. Radio and press. But its over, the story is done.
The result as GUMM announced on 11/18 is they got a slew of orders to stock shelves and put inventory into the system.
GUMM reported orders to be ahead of of 3rd qtr 5 fold, so I infer Gel Tech will book 6 mil in sales in the 4th qtr (at 3-5 bucks a retail unit accounts for around 1.2-2.0 mil retail units). Given the publicity died (except for the negative publicity surrounding QGLY) before many of these orders shipped I'd question how much of that inventory will end up in consumers hands as compared to sitting on a shelve or warehouse.
Anyway if Gel Tech books 6 mil at 70% gross profit and experiences operating expenses double of that in the 3rd qtr (a guess) that puts expenses at roughly 1 mil giving Gel Tech a operating income of 3.2 mil, 60% of which would be GUMM's share or 1.92 mil.
Assuming the gum operation repeats the performance of the 3rd qtr, GUMM ends up with 900k pretax (of course GUMM won't pay any taxes) or rougly .13/share. Add that to the ytd loss of -2.1 and you still have a bad year or a loss of 1.2mil or -.15/share. Although Davidson and Hensley (eg Bio Delivery will do ok......especially due to the fact the cost of the Citidal financing is attributed to the gum operations).
Looking forward to 1st and 2nd qtr of 00 it gets interesting.
How many orders will be booked in the 1st qtr......particularly if the stuff isn't moving......my guess is less than the 3rd qtr.
How about the 2nd qtr.....will depend on GUMM's return policy...will they or did they offer a generous return policy on unsold inventory to get the retailers to put it on the shelve?
Of course I haven't assumed that GUMM has done much in the coop advertizing area which could drive operating expenses.....conversly if your not getting you message in front of consumers their attention and dollars go elsewhere.
All in all still a looser.
BTW QGLY's troubles with FTC doesn't help. You should check out QGLY I think it might be worth buying a few for a possible bounce. Book value is 2.7/share, with cash of 1.3/share, closing yesterday at 1 21/32 just off its low of the year. They've had trouble with copy cat products.
Mad2
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