Re the "unexpected production shortages and temporary delays", Mr Frankel said during the conference call that a large company (didn't say what company) that makes a certain component (didn't say which component) of Qdel's tests (again didn't say which ones) made a minor change in their component - apparently, this company sells this component to many other companies in large amounts- this change didn't have any effect on other customers but it did have an effect on Quidel's tests - had to be corrected, causing delays in production - the problem has apparently been resolved and Mr Frankel said the 3/4 million in backlog will be shipped by the middle of this quarter - so it sounds like we can add 3/4 million onto the revenue figures for the second quarter. Re Mexico, I think it is a great idea to use lower cost labor for assembly and packaging of tests in Mexico and save the higher priced labor for more critical production functions to be done on site in San Diego. Their 1st quarter production shortage would have occurred anyway, whether their manufacturing is done at their SD facility or 1/2 in SD and 1/2 in Mexico - the key is controlling costs and leverage - remember, in 1-97, Mr Frankel said that for every dollar of sales over 9.5 million, 50% or more drops straight to the bottom line - the royalty payments now jack that figure up slightly to about 10 million, but the principle is the same - going to Mexico is a way to push that figure back down toward 9.5 million - Also, this isn't a major transportation expense either - their HQ is only 20 miles away from the Mexican border.
.This company will make the patient investor a good pile of $$$$$- if you don't have the patience or enough faith in the direction of the health care industry generally or this company in particular, then, by all means, sell,sell,sell. I'll bet you wind up kicking yourself in the butt in 12-24 months when revenue, profits and the stock price are a lot higher |
