j,
Inventory wouldn't have been expensed unless used - a straight cash to inventory entry, deplete inventory as it's used. Rising resin costs could be the reason operating margin increased. I bought oil to hedge the price in 1979. You pay a small premium over the spot price to lock it in. If it goes above that price, you saved, if not, you wasted your money. If Jetcrown moved quickly, they will have benefited, but this price jump came fast and furious so I doubt if they hedged at the bottom.
I estimated .71 and it came in at .54 - about $930K below my estimate. Factors I hadn't considered - Lower margins because of resin price increases causing $400-500K. GS&A up about $500K, possibly due to R&D on the 'security and telecommunications'? (They include R&D in GS&A.) $270K less 'other income' that I presume is interest on cash.
Not concerned that they came in lower. More concerned about the future. We need to know about "our own security and telecommunications products". This is totally new, never mentioned before. Are they going into competition with VTech, Namtai, Kyocera or is it new products that their customers aren't making? Do they intend to market themselves or have they made an arrangement with some other company? Is this a mistake (IMO management makes few mistakes) or is this a major new positive development? I hope to talk with the company next week.
I've gotten back most of my shares. I think the MM was on 15.50 because I couldn't buy there, but was able to get some at 15.625.
Later,
Ron |
