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The most disappointing thing in the announcement is the failure to generate significantly higher revenue. In Dec 96 quarter, they have 16.1 million in sales; but in the most recent quarter, revenue only grew 6.3 % to 17.1 million. Given that the entire product line was revamped, they still can't sale their product, I would suggest that the company to stop upgrading the current products (though still selling them) and exploring other new software titles. One thing came out of my mind is entertainment. With their expertise in 2d/3d graphics, writing up games should be a piece of cake.
But on the other hand, the CEO did something right at cutting sales/marketing and general/administrative costs while boosting research/development (numbers compared to the prior quarter.) In fact, the general/administrative operating expense was the lowest in 3 consecutive quarters.
One thing I still don't understand is where did the revenue of the CreataCard Plus go????? The combined revenue for the 2 most recent quarter is 17.124+16.113 mil = 33.237 mil. According to the EDGAR database, the consumer products accounted for approximately 30% of the total revenue. 30% x 33.237 mil = 9.971 mil. Assuming CreataCard Plus was the only product they have in the consumer line (which is not true; they still have Hallmark card and Crayola in 1996), anyway. If they really sold 1.4 mil copies of CreataCard in the past 6 months, doesn't it imply each copy of CreataCard they sold they only received $7.12. After the cost of revenue (i.e. disks/manuals/boxes etc...), all they got is, maybe, less than a penny! The company must be hiding or delaying the revenue due to whatever reason...
I just don't believe they only receive $7 on each copy of CreataCard sold. Maybe they will be better off designing graphics on toilet paper; and ask the toilet paper companies to pay them a penny on each roll of toilet paper sold. (Hey! That will be a billion-dollar business!)
Sorry to those folks who aren't humorous... |
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