TRIIboy, your analysis:
Message 6388486
Excerpted here:
preliminary analysis of VTCH (mind you this is before the 10-Q).
Inventory rose for yet another quarter, and has risen 81.6% versus a
sales increase of 51.6%. As all retailers in Brazil, they are feeling the
pinch as inventory rises as people stop or slowdown their spending
habits. The problem with holding computer parts is that they become
obsolete a car does not. I have mentioned in the past how car dealers
have 40 days of inventory now, instead of the normal 15 in Brazil, its
not different for a PC company.
Look at what their cash has done in the last year, even with selling
their accounts receivables and doing more dilution and debt, their
cash is plummeting.
Since we're post-earnings announcement, one of my conerns that they'd surprise to the upside is gone. Still, we are talking about a company in Brazil, with connections (by some reports) to the Brazilian government, so I get a little worried they can write their own rules.
As far as obsolescence of PC's goes, there are plenty of examples of governments buying old, outdated equipment, so I wouldn't place to much weight on that argument. The cash burn, however, and increasing days of inventory are undeniable.
(disclaimer: no position in this stock.) |
