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Biotech / Medical : GUMM - Eliminate the Common Cold

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To: pz who wrote (4313)	4/30/2003 6:58:29 AM
From: DanZ	Read Replies (1) of 5582

<This is usually MTXX's second best quarter for earnings> Usually isn't a good way to make investment or trading decisions. Usually doesn't mean always. Anyway, your assertion that the first quarter is usually the second best quarter is wrong, and there aren't enough profitable quarters in prior years to draw any conclusion about trends. The first quarter was the worst of the four quarters in 1999 and 2000. It was the best quarter in 2001 and the second best in 2002. I wouldn't call one out of four "usually". <this means this next quarter will be a loss and then the next one also.> No, that's not what it means. Matrixx earned 11 cents per share in the third quarter of 2002. How do you know that they won't beat that this year? The wildcard for this year's second quarter is whether the new products that will be introduced at today's meeting are ready to be shipped, and if so, how much they will sell this quarter. Also, how will sales of the existing seven products go this quarter and how much will they spend on advertising? There's still a lot of room for growth in the products that were introduced last September as distribution has been low to date on three of them. <Who cares if they sell a ton of Zicam if they can't make a profit doing it.> I'd suggest that you go back and read my proforma income statement, get out your calculator, and see what you come up with. The questions are: 1. Do you believe the company's guidance for 30% revenue growth in 2003? 2. Do you believe the company's guidance that operating expenses in 2002 are about what they should be, and that operating expenses as a percentage of sales will decline this year? 3. Do you believe the company's guidance that they will spend about 6% of sales on R&D? What do you think that they are spending all that money on? See any new products coming or maybe even further clinical data to support existing products? 4. Do you believe the company's guidance that they will maintain gross margins at about 70% to 72%? 5. Do you believe the company's claim that they will introduce new products this year? You still seem to be fixated on Zicam Cold Remedy for some reason. These aren't my projections. They are from the company. I simply plugged their projections into a spreadsheet and came up with earnings per share this year of 26 cents on a 30% increase in sales, and 37 cents per share on a 40% increase in sales. You're getting ready to find out how fast earnings can increase at a tiny company with less than 10 million shares outstanding after they reach critical mass and exceed their break even point. You will need a lot of luck if you are short this stock, Paul. The company is growing steadily and it's only a matter of time before the stock price reflects it.

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