Richard,
Nice to see one of your too infrequent posts.
SG&A - "...largely due to payment for R&D support, quality control, and engineering supports ... which the company carried out internally" I believe they've had the ability to do this for a year, but they were growing so fast I think they were reluctant to bring all of it inhouse. With the falloff in sales and lower number of new products, I think they decided it was time to cut the cost and go it on their own.
I thought the report held no surprises. A couple of posts on dilution caught my attention. How did dilution dropped from 5.623M to 5.511M? I think we have had some buyback support. That would explain some of the fast rise to 15.00 even though I think they must have dropped out at 12.00 or below.
The last couple of Qs I had been concerned about the A/R. I now see that it has fallen to a level consistent with revs and the number of customers. Cash generated the first six months has been awesome. Depreciation has increased around 500K (.09 on EPS), they paid out 4.1M in dividends, made 2.3M in capital expenditures, and still increased cash by $6.6M. NET liquidity is now over $39M. Awesome!!
Jetcrown lost 50% of Mita in September. Substantially lower resin prices would be reflected in revs. In spite of this, Jetcrown continued rev growth.
Kwanasia continues to be down, but we must remember that it was Kwanasia that drove the growth last year. They have the most competition and it's more difficult for them to increase revs. However, management is concentrating on customers for Kwanasia and I believe we'll see them improve next Q.
Kwanta had the largest growth last year and reached profitablity for the first time in the 4Q. I now see that they were slightly in the red, probably due to lower business with Jetcrown and Kwanasia. As they are only a 30% or so factor to earnings, not a significant problem. If Jetcrown and Kwanasia start growth, Kwanta will move with them.
Some things I meant to mention earlier-
The 9 Management, Officers, and Directors drew total salaries in 1997 of slightly over $3M. As a group they hold shares and options of 49.4%. A report that Insiders hold 64% would have to include Behringer's shares.
When I went back to look this up, I noticed a change in the Board. When Deswell IPO'd, they signed an agreement that gave Barringer the right to appoint a Board member for two years (end 7-24-97). Joseph Wright was Barringer's man on the Board. He apparently wasn't contributing because he wasn't listed as being on the Board the end of the fiscal year. I'm now wondering about some other things. Barringer sold the Deswell shares they held last year. Then, when they got sued over the AEHCF deal, they put out a PR that named Deswell, yet named no other HK/China company they IPO'd. I'm now wondering if Wright wasn't their Insider and supplying them with info. Appears they were upset that they lost him on the board.
Be interesting to see what the analyst does. He should be there now.
Enough for now,
Ron |
