Someone posted this on yahoo msg thread.
msnbc.com
HAUPPAUGE, N.Y.-BASED Audiovox (VOXX) faces formidable rivals in Nokia (NOK) and Motorola (MOT), which dominate the cell phone business. But Audiovox has a healthy 11 percent of the North American market, and the company?s growth has been spectacular. Sales are up 88 percent this past year ? and Audiovox doesn?t even build a single phone.
?We sometimes call ourselves a manufacturer without a factory. We do not own a factory, but yet we perform many of the services of a factory ? product development, testing and design,? said John Shalam, Audiovox?s chairman.
This virtual vender of cell phones, whose key customers are Bell Atlantic (BEL), Vodafone AirTouch (VOD) and MCI WorldCom, (WCOM) buys products from Toshiba, (TOSBF) Mitsubishi (MMTOF) and Hyundai (HYMZF) and works with the giants on both sides of the supply chain to sell products.
?That has been the cornerstone of our strategy since I founded the company [in 1965]. Develop the product line, work closely with first-class world manufacturers, but let them invest in the bricks and mortar, computers and production facilities. We want to focus all of our effort into marketing,? said Shalam.
John Shalam, Audiovox?s founder and chairman, plans to expand the company's global reach.
Audiovox, from the Latin ?I hear? and ?voice,? is riding the wave of the wireless revolution. The company sold 6 million cellular phones last year and projects to sell 10 million this year.
Analysts are optimistic about the business? growth prospects. Of the five analysts who cover the stock all have a ?strong buy? rating on the company.
?Audiovox, at a minimum, should grow 30-35 percent, but it could come closer to 55 percent if their strategy is successful,? said Wojtek Uzdelewicz of Bear Stearns.
Not only are new customers coming online at an astounding rate, but the industry?s ?churn rate? is even more incredible. Consumers typically dispose of phones on average of about one every year.
?The next step is going to be the transition from digital phones to smart phones ? Web surfing phones to access the Internet. They will obsolete all the phones on the market today,? said Shalam.
Analysts see significant upside potential in that trend. ?Going forward with wireless Internet, we?ll see another powerful cycle that will demand handsets. Audiovox should benefit from that,? said Wojtek.
Cell phones have become a commodity, which means that competition is fierce and profit margins are tight ? 10 percent for Audiovox. As a result, the company must run a lean machine to pump out profits. Audiovox employs only 200 people, but they sold 6 million phones and racked up total sales of $1.16 billion last year.
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The company?s stock has skyrocketed from 6 to 72 this past year, trading around the mid-50s this week.
Audiovox?s big push going forward is to begin penetrating the global market. Today, only 15 percent of the company?s business is outside North America. The telecom vendor hopes to expand that to 25 percent this year and 50 percent by 2003.
?We?re small enough to really give fabulous service to really hustle and run, but yet we?re big enough to have the financial resources that you need to be an accredited player?We?ve got all that going,? said Shalam.
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