Gordo,
I agree with Don if indeed his assessment is correct. If DFX plans on building Nautilus in its traditional business, all bets are off -- but if DFX bought Nautilus for (1) its brand name, and (2) its manufacturing facilities, then I think it was an excellent acquisition for the reasons Don mentioned. DFX is a direct marketer, what do they know about turning around companies -- I think the market will ask the same if they intend on building Nautilus in its traditional business which would be unrelated to their stated corporate strategy.
If this helps, on November 12, a day or two after the announcement, both Research Capital and Sprott Securities reiterated their buys (strong buy in the case of Sprott), for DFX.
Comments from Reseach Capital: "Analyst Robert Millham says NAutilus has a great consumer brand name but data from its parent, Delta Woodside Industries show decline in sales over past few years... As a result, says it remains to be seen how beneficial Nautilus will be to DFX... Plans to talk with DFX soon about its strategy for Nautilus... Does not expect deal to affect EPS near term... Has US$1.12 '98, US1.53 '99 EPS estimates, C25.75 target."
Comments from Sprott Securities: "Analyst Andrea Harbour says deal appears good for DFX... Notes Nautilus brings well respected, well known brand name to DFX's family of fitness equipment/// Mptes. however DFX expects to operate Virginia-based Nautilus separately from its Bowflex line, although some cost-benefical synergies could emerge in terms of product distribution, shipping... Does not see acquisition has having much impact on EPS over near term... Maintains US$1.10 '98, US$1.78 '99 EPS estimates; $27.30 target"
Let's just say that I will be most pleased if those targets come remotely close... <g>
Clement |
