To: Bill Wexler who wrote (3089 ) 8/16/1999 11:17:00 PM From: DanZ Read Replies (1) | Respond to of 10293
Bill, You failed to mention that sales of Zicam in Q2 were expected to be lower than in Q1. The company began shipping Zicam to new retailers such as Walmart, Target, and Rite Aid in the third quarter and those sales are not reflected in Q2. In addition, GumTech virtually stopped advertising in the second quarter because they didn't have full distribution and the summer isn't exactly during the cold season. Second quarter sales of Zicam reflect reorders from a limited existing retail base and met expectations. You also failed to mention that GumTech's gross margins improved substantially in Q2 and that their operating expenses as a percentage of sales declined. This is quite an accomplishment given that one might expect lower efficiencies with sales lower than Q1 99. The company's gross profit margin on gum was higher than any quarter since 1997. I didn't expect sales of gum products to be lower in Q2 than Q1 but I don't see this as a big negative because GumTech isn't going to get rich on Breath Asure Dental Gum, Ranir dental gums, Acutrim Diet Gum, and other current gum products. The stock partially reflects future sales of nicotine gum, a dental gum contract with a major oral health care provider, and sales of Zicam in the next two quarters. You would have more credibility if you acknowledge more than just what you perceive to be negative aspects of a report. As I have said before, the market won't ignore things just because you choose to sweep them under the rug. I'm still waiting for an answer to a question in my last post to you. Why is it so hard for you to answer a question about something that you stated? I guess it's just part of your personality to ignore things that you don't want to discuss. Dan