As a long-term observer & past investor in this stock, I must say that the market's reaction today was, IMHO, more favorable than ominous over the longer term.
Notwithstanding the inflated expectations many individual investors have given DIMD because of The Rio, I think the relatively flat performance of the stock in the weeks preceding the earnings release was indicative of the tepid expectations the market really had this Q.
What we saw today was the market's surprise to the "unexpected" profitability problems Schroeder & Co. encountered this Q with products falling within its "core business."
Taking an objective view going forward, I don't think there are many individual investors, particularly those who have expressed their opinions here & on other boards, really purchased DIMD stock because of its "core biz." Sentiments expressed indicate they purchased DIMD shares for prospects offered by its Rio & to lesser extent, Homefree product line. These are the products that will determine DIMD's future - not the "core biz."
I think DIMD will maintain their higher-end video card biz only if they can make a reasonable profit. They have long-standing brand awareness in the video card biz ; established channels of distribution; & maintain excellent relationships with key vendors down the channel, both OEM & retail. The video card biz should be their bread & butter, but this Q's results showed it ain't. So unless they can quickly reverse the fortunes of this core biz, they should drop it & focus on the new business model that their new line of products reflect.
IMHO, the Street's reactions today implies it remains focused on the "promise" of DIMD to extract itself from the quicksand of the video-card biz that has plagued this Company -- & its management for too long now. Otherwise, I think this stock could have easily seen upper 3's-lower 4's today. JMO. |
