Perhaps if there is one nagging doubt I had at the back of my head is that audiovox in the past has not really manufactured any of their own products. They either contract them out or oem other gadgets, not a very compelling business.
This is also one of the contributing factors into the lower margins in what is perhaps one of the most competitive areas of the 'New' economy. But digital wireless phones/gadgets are competitive for a reason --- the potential payoff is huge. And whichever way I look at it, voxx punishment is way overdone. Even if we leave the revenue picture and consider earnings (voxx's area of relative weakness -- we're basically talking low margins), the true measure is always P/E relative to other layers in the industry --- qualcomm, nokia, ericsson, rimm, and for whatever reasons, voxx is not considered with the same yardsticks as these other companies. Why?
With basic monthly rates for digital cell phones competitive with the home phone rates, it doesn't take much imagination to realize that many many more people will be carrying these phones every year. But even this is not the real potential here.
However, selling the phones alone is not enough. From their #2 position in cdma, VOXX has the right channels to try to push out new technologies, new software to 'web-enable' wireless phones. But this requires some R&D into software, encryption standards, transport layers for digital transmission to make it real, something that they may or may not have done.
Market cap now about 0.75 of annual sales --- looks undervalued doesn't it? I think I'll accumulate again.
you can't fall forever with this stock's fundamentals. |
