And the Skeeterbug goes silent........
From my calculations, GTW's trailing earnings are now $1.96 which gives them a PE of about 25. GTW has affirmed earnings expectations of $2.12 for 1998 and $2.80 for 1999. sb, I guess Apple didn't squash GTW too bad, and what about that 6% growth rate?
When I said "fundamentals", they consist of two things.
1) The business model that the company operates under.
2) Execution of that model.
Therefore the quarterly earnings are important as they show a periodic assessment of the execution of the model. GTW reported strong execution again. Cash flow was good, margins were good, sales growth was good. Inventory control appears to have been a bit weaker, but nothing like the 2nd quarter of 1997 problem.
Every time I turn on the TV now, I see one of the YourWare ads. It appears that the brand awareness strategy is reaping benefits with the increase in home market share. Everyone in the industry is now copying the "PC + Internet Service" that GTW initiated.
The Country Stores, which everyone seems to think will be the eventual doom of GTW, appear to be doing fine. "Brick & mortar costs" are generally low for a small retail location. The big costs are inventory and labor. GTW carries no inventory in the stores, and labor cost is really no different than GTW's national customer service and technical support centers. The verdict is still out whether showrooms make sense, but they are an interesting experiment without a lot of risk.
Bottom line - you can speculate all you want about the next years PC sales and the general outlook for the entire industry. But GTW's business execution over the past year has been excellent.
Kory |
