It is apparent that the conference call renewed or buttressed enthusiasm for the company. A sensible plan for bringing products to market, and the prospect of new markets, is a reason for a positive evaluation.
One thing to consider is that an announcement was apparently made, based on a post on this BB, that the company now expected to be profitable in the first quarter of 1999. This appears to be a change. The reports previously had anticipated profitability during the current fiscal year. As far as I know, the projections for current year productivity remain unchanged. In fact, BB comments and recent news indicate that product was coming to market earlier than expected. I suspect the announcement of profitability in the new year implies that expenses previously not accounted for are being factored in to the revenue picture. It also is unknown, in view of this change, whether there will be a difference in the amount of positive earnings from those previously reported. This would be information relevant to consider. Earnings could be lower, perhaps significantly lower, than previously thought.
Gross revenues are important, even in the absence of net earnings. Companies often advance in price based on gross revenues. Optimism about what the future may bring also creates demand. But, if earnings remain low, a company may be vulnerable to price corrections. This can happen particularly if there is bad news. Bad news could be, for example, introduction of competing packaging, the expiration of first rights for the Volpak machine, or significant price competition.
Any comments on these matters, additional information, or filling in details, would be welcome.
Steve |
