Michael:
PNICHO is our Gravis guru on the AOL board. She does marketing in the computer gaming industry and tells me that Gravis had a huge 4th quarter without the help of GrIP or Ultrasound PnP. I have consistently seen the Gravis gamepads in all of my store searches (CompUSA, Egghead, Circuit City, Walmart) and my colleague in N.Y.C. has also confirmed that the game pads are abundant. However, at a retail price of $9.99 we never really gave the gamepad much consideration as a money maker for Gravis. Retrospectively, this was a mistake because Gravis does at least 75% of its revenues through its core product line (gamepads and joysticks). Anyway, PNICHO tells me that Gravis sold ~500,000 - 1,000,000 gamepads worldwide in the 4th quarter (her info has been consistently correct concerning the numbers). The mark-up on most of these products is ~30-40%, so that means Gravis takes in a conservative $3-4/gamepad. Lets assume that each gamepad (they are manufactured in China) costs $1-2 to make. So taking a minimalists approach, Gravis is earning $1.00-$2.00/gamepad. This should translate to $500,000 - $2,000,000 in earnings, which would be only part of the 4th quarter story. They do have to pay out ~$500,000 for the Focal Point lawsuit, but that should still leave Gravis with earnings of $500,000-$1,000,000 in the 4th quarter. If this scenario is true (lots of assumptions), then we are looking at earnings of $.03 to $.06/share for the 4th quarter. This would be huge for Gravis and would unequivocally point to a turnaround situation. Even if the company has been standoffish towards its shareholders, one would be foolish to avoid investing in a company solely because of this. Many of these small companies have poor IR when they are getting started. In fact many larger companies also have weak IR support. If the numbers are there, then the efficiency of the market will eventually take care of the stock price. It may just take a little longer. I am still wating to hear from Cooper, but will report to the SI board as soon as I speak with him.
David |
