<<That is some leverage. Five million dollars more in revenues represents about 21 cents per share in the top line. If you apply a 35% tax rate, you are down to 14 cents per share. And there have to be costs. Let's say, generously, 11 cents earnings per share.
I like Barbara, but . . . >>
If the $5M deferral took place after work in process and inventory had been built up, then all the expenses are already factored in to the current 2Q numbers and the $5M would go right to the bottom line per the calculations that you did, i.e. 14-15 cents per share.
Except for the carrying/storage/spoilage costs, the shipment of the $5M later this year should inflate the gross margin and earnings in some future quarter. However so long as the deferral is temporary and the total demand remains the same then the annual numbers should be little changed as the bad 2Q and the better next quarters average out. If the deferral represents a shift in demand then the revenue loss is permanent though the earnings and gross margin should be OK unless the inventory has to be written off.
I wonder if the $5M deferral represents the effect of the Asian recession as sales slow down there? I also wonder what is going on in sales/marketing/customer relations that these kinds of order holds/deferrals keep on coming as surprises (the satellite comms, then CUGR, now this). A few weeks ago, the Trimble CFO said he was "comfortable" with the consensus estimates after II pulled the plug based on their "inflated" estimates. That seems to imply that this order deferral happened very recently, just as Trimble was about to make a lump shipment at quarter end. |
