Beat estimates by one red cent.
Conference call was o.k. Q2 is supposedly most difficult quarter for them.
As to the income statement, they shoot for 30% gross margins, so 27% was less than their target. The decrease was due to one of the usual culprits, i.e. poor product mix vis-a-vis COGS. Q1 gross margin was about 32%, so you get a feel for the fluctuation involved. Most interesting was the drop in SG&A on greater revenue- apparently the savings comes from consolidation in personnel, but this wasn't clear to me.
As far as the balance sheet is concerned, they've got about $30 M in cash mostly from the secondary. I think they were smart to have done this and take advantage of their stock price when this placement went through for $17 a share.
10 days ago or so they again signed a GW2K contract which is good till July 31 1999 with the same terms as before.
DVD equipment is ready to be installed but if I understand correctly there's a bit of delay that they hope to resolve shortly.
4 analysts on the call from Pacific Crest Securities (don't know 'em), R. J. Steichen, Cruttendon Roth, and Kinnard.
To work up next quarter's estimates you would do well to use a figure of about 7.5 million shares.
They have a busy Fall schedule.
Right now the newly ramped San Jose factory is running 4 lines at 24 by 5. This rate was achieved as of about the 2nd half of the Q.
The reality of DVD is that thus far demand is light. This is partly due to the three varying formats of 5 (simple to manufacture), 10 (two 5s back-to-back on double platter), and 9 (dual layer, single side).
Although the conference call was o.k. I'll probably be selling to move my funds elsewhere till the quarter moves closer to earnings again.
Anaxagoras |
