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Gold/Mining/Energy : Direct Focus Inc. (DFXI)

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To: trilobyte who wrote (489)	5/26/1999 2:23:00 PM
From: Gordo	Read Replies (1) of 768

Trilobyte, There were some passing references to the air beds in DFXI's 10-Q report. In particular, "We expanded our product base in late 1998 by introducing a line of airbeds under the trade name "Instant Comfort," and more recently under the trade name "Nautilus Sleep Systems." We are currently developing and testing a direct marketing campaign for this new product. We intend to expand this direct marketing campaign in 1999 and anticipate that this expansion will cause our line of airbeds to generate a portion of our net sales in 1999.* However, we expect that the gross margin for our airbed products will, at least initially, be lower than the gross margin for our Bowflex products.*" The one thing that caught my eye was the fact that they expect margins to be lower on the air beds. I know from previous conversations with Rod Rice that they had initially expected the margins on the air beds to be the same as for the Bowflex. It appears that their test marketing is indicating that they may need to lower the price and sacrifice some margin in order to sell this product. gord

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