Ray,
Thanks for your information. I went back and tried to find out why I thought CHNL was capital intensive and if sales were rapidly increasing, but not income. I found the clips below. These are for the FWIW column because I don't know how, for lack of a better word, "honest" management is. Their stock price is so volatile. Plus, if they are going to be earning a $1/share for 1998, then their PE is only around 10. For a company positioning themselves to benefit off the "last mile" upgrades where many billions are going to be spent, this is awfully low. So that is what makes me wonder. It could simply be that they are a small cap and no one likes small caps, period. So take everything below with a grain of salt.
Interesting to hear you visited the factory three years ago. I'm not quite sure in what capacity you visited them, but what did you think overall? Did it look organized and appear they knew how to run things? I look at their products, and they seem to be, well, pretty basic. And a real hodgepodge of shapes, materials and sizes. Their metal enclosures (Rhino products) look pretty ratty out in the field. When I look at their products, it makes me wonder what the factory is like? I'm hoping you tell me you can eat off the floor, but I get the feeling it's not that well organized.
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With regards to RELTEC (symbol:RLT), you're right. They are definitely a competitor and RLT is much, much larger. But RLT operates in four major areas, only one of which competes directly with CHNL. But I can't figure out how large this particular division is? Their products are very similar. RLT makes both plastic and metal enclosures. As a matter of fact, from a layman's point of view, they look like copies of each other.
I'm not sure how to evaluate RLT since it is so large and has so many divisions? RLT has a market cap approaching $2 billion. CHNL only $.1 billion. Quite a substantial difference. I don't have the time to do an analysis on RLT vs. CHNL. I was hoping you would tell me you didn't know of any direct competitors. :)
Thanks,
MikeM(From Florida)
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Channell Commercial Corp. expects its second-quarter earnings, weighed down by heavy infrastructure investments, to fall short of those of a year earlier. President and Chief Operating Officer Bill Channell Jr, told Dow Jones the telecommunications equipment maker expects to report earnings of 23 cents to 25 cents a share, down from the year-earlier 28 cents. Revenues, though, surged by at least 34%, to between $21 million and $23 million from $15.7 million in second quarter 1997. The company is "investing heavily in infrastructure" through acquisitions and capital spending that are dragging down earnings this year, the executive said. Still, Channell sees full-year earnings rising past $1 a share, from 92 cents in 1997.
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Channell's President, William H. Channell, Jr., said, ''With the Egerton acquisition, Channell becomes a global telecommunications equipment manufacturer with approximately 44% of our 1997 pro forma revenues coming from telephony companies and 56% from cable television operators.
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We are determined to make the investments in both the Egerton and Channell infrastructure -- both people and equipment -- necessary to serve our customers future needs and return Channell's margins to our traditionally high levels. We are convinced these near term reductions in margins are required so that we can solidify our position as a market leader. Channell's new fiber optic and heat shrink capabilities, both obtained with the Egerton acquisition, position Channell as a unique one- stop shop for telcom enclosures and connectors. Regardless of which technologies dominate in the race to upgrade the world's telcom equipment infrastructure, Channell will benefit because virtually all of the upgrade technologies require local loop modifications and the purchase of local loop equipment made by Channell."
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