I wonder if that EASY news is not as bad as it seems. This is from their Augu 10Q. Also curious as to why the insiders have been acquiring shares at these levels. They seem confident of Storm's future as do I.
Revenues
Revenues were $10.3 million in the second quarter of 1998, an increase of 56% from the $6.6 million reported in the second quarter of 1997. Revenues increased to $26.4 million for the six months ended June 30, 1998 from $8.6 million in the comparable period of 1997. The substantial increase in revenues was due primarily to European sales of Logitech-branded products and increased European sales of Storm-branded products resulting from the Logitech Acquisition and
continued increases in domestic unit sales volumes.
Cost of revenues
Cost of revenues increased to $14.3 million in the second quarter of 1998 from $6.3 million in the second quarter of 1997. Cost of revenues were $28.1 million and $10.1 million for the six month periods ended June 30, 1998 and 1997, respectively. Cost of revenues increased in dollar amounts as the Company incurred higher costs associated with its increase in product sales and due to a reserve provision recorded in the second quarter of 1998. This reserve provision, totaling approximately $4.4 million, was primarily related to the write-down of inventory associated with the Company's transition to its new line of differentiated scanner products.
Included in the 1997 cost of revenues was a $1.1 million charge, primarily related to the write-down of the Company's EasyPhoto Drive inventory for purposes of reconfiguration and sale to OEM customers, recorded in the first quarter of 1997.
Gross profit (loss)
Gross loss was ($4.0) million for the second quarter of 1998, representing (38.8%) of total revenues. For the second quarter of 1997, gross profit was $0.3 million, representing 4.6% of total revenues. Gross loss was ($1.7) million and ($1.4) million, respectively, for the six month periods ended June 30, 1998 and 1997, representing (6.5%) and (16.4%), respectively, of total revenues for such periods. The negative gross margins during the second quarter of 1998 and the six months ended June 30, 1998 and 1997 were primarily due to the adverse impact of the provisions for inventory write-downs in the second quarter of 1998 and the first quarter of 1997, as described above.
Your thoughts? Seems to be a short term cash flow problem to me.
Joe PTG&LI !!! |
