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Technology Stocks : Hello Direct (HELO) - an overlooked internet beneficiary
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To: Sid Turtlman who wrote (139)4/14/1999 10:40:00 PM
From: Dr. Bob  Read Replies (1) of 153
 
Sid,

Interested in your thoughts on a couple things I noticed from the quarterly report and the annual report:

1. Accounts receivable jumped 30%, while cash and investments dropped by about the same amount ($1.6 million). Are they having trouble collecting? Engaging in channel-stuffing? Some other explanation? The PhoneZone acquisition might explain some of the drop in cash, but not the big jump in accounts receivable.

2. Shares outstanding increased by about 200,000; only 38,000 or so were bought back - so as you noted earlier, there is minimal activity there. More shares issued as part of the PhoneZone acquisition, lots of options granted to employees that will start to get exercised when the stock gets into the teens, and the company is asking to expand that program further. Potential for significant dilution?

3. Overall, earnings just getting back to their 1995 level (1994 $.46/share; 1995 $.48/share; 1998 $.52/share, so comparisons to 1997 are not particularly helpful in projecting earnings growth going forward.

Having said all that, I still like this company - headsets are a growth industry, they have found a good niche and a good marketing strategy, and are diversifying into other high-margin products. But I would be interested on additional thoughts on the financial statements, so we remain objective about it!

Bob
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