Hi Elizabeth,
Interesting set of events today. BRLC reverses on same volume that we saw on the upside last Friday despite new product announcements and great upwards revised guidance. BRLC previously guided on 12/4 that they would be above the previous guidance of $178-$190M in revenue, including the results of Vivitar. Now they state that they will be above revenues of even $240M on the high end of their gross margin range, including Vivitar.
That's a pretty tremendous statement. At a gross margin of 17%, that's $41M in gross profit. Operating expenses last quarter were only $9M. Let's say that operating expenses more than doubled to $20M (Vivitar added expense + increased sales expense to support $240M in revenue). That still leaves $21M in EBITDA. Subtract out the $5.7M in the one-time non-cash interest expense for the retirement of the 9% convertible debentures that leaves roughly $15.3M. All of this will fall to the bottom line given the accumulated deficit of $16M. With an estimated diluted share count of 56.1M (taking into account the recent $10M financing), that's $0.27 per share (GAAP) or somewhere around $0.34 per share (non-GAAP), bringing the first half results to $0.34 a share (GAAP) or $0.41 a share (non-GAAP).
I think Q3 will likely be strong with holiday follow-through driven by Superbowl sales. $0.50 EPS (GAAP) or $0.57 per share (non-GAAP) for 2007 seems very doable with a conservative $0.08 per share a quarter for the second half. One would think that the Vivitar distribution in Europe, accelerated LCOS sales in China, and ongoing popularity of LCDs in the US will make this an easy target. At a $9.70 after hours share price, it seems to me that BRLC is very undervalued, given its growth trajectory.
I am waiting to hear more good news from CES - hopefully something about a heads-up display for the Apple IPOD. Hopefully some news about a new big box retailer order.
I think that tomorrow we should see a pretty significant early AM selloff as there is more profit taking and capitulation, but my sense is that we close back in the $10-11 range - if not tomorrow, then the next couple of days. The story keeps getting better and my sense is that the good news is not over yet.
I think I will try to add back some shares that I sold previously on any dip tomorrow.
Good luck!
Tom |
