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Technology Stocks : VOXX (AUDIOVOX CORP) -- Ignore unavailable to you. Want to Upgrade?

To: brightness00 who wrote (116)	3/25/2000 7:44:00 AM
From: SBHX	Read Replies (1) \| Respond to of 168

I started buying into this stock way back in June. This is probably the reason why I didn't cash out earlier (my avg cost is around $10, but to tell the truth, I saw warning signs with some other semicons, but I never saw this correction coming, right now, I didn't even understand what caused it). Back then, it was VOX and traded on the american exchange, it only became voxx when it moved to nasdaq. After looking around for unseen dangers --- When it moved to below 40, I basically overcame my surprise and doubled up. Initially, the non-manufacturing aspect is a constant source of problem for me. However, the main reason I ignored it was the very very compelling P/R and the attractive P/E back then. Note however, that many very successful semicons also contract out the manufacturing of their products. Pretty much all of the chip companies I've been in (sndk, nvda, alsc, siii, tdfx) are not only FABless (FAB=wafer fabrication factory), they don't even do their own assembly or testing --- they're all contracted out to specialty factories that are responsible for a very specific part of the manufacturing process. In many cases, even the final assembly of chip insertion into boards and into boxes with manuals+CD is contracted out to places like china or vietnam (whichever is cheaper --- welcome to the new global economy). The difference of course is that these guys I mentioned all do their own design, whereas, audiovox's design role is probably less obvious. They get the cdma chips from qualcomm and probably have a reference design for the basic phone, from which they may choose to make different versions with varying feature sets. In some cases, they will even resell relabelled phones (eg : Bosch GSM) --- sort of like the Radioshack model. It's probably these products that their margin is going to be low --- there's basically no value add, they buy a completed product and have to sell them as is through their channels. But even the fact that they can move so many of the completed phones say something about the effectiveness of their distribution channels. So these guys are very savvy merchandisers. The electronics side (mobile AV) looks interesting --- they currently have the most cost eefective mobile video solution (pioneer and panasonic are competitors). Note that their earlier forays years ago into the cd-changer market has not been successful, the audiovox brand had been associated with cheap gear, and few ever bought the cd-changers. However, their mobile video seems to be doing well. Right now, it doesn't really matter yet, since their total consumer electronics division sales q1-q3 of 99 was <5% of their total revenue. I have not seen the q4 and q1-2000 breakdown. The nissan contract should move these numbers up --- and many suv and minivan owners must be thinking about adding a video system to keep their kids quiet for the long summer car trips that american families usually take. (No more are we there yets!) A 2nd interesting product is the MP3 players --- a direct competitor to the siii/diamond rio, samsung yepp and creatve labs nomad players. The wonder of digital music is that everyone's playback quality is comparable, and mp3 players are small enough to fit in your shirt pocket. When it comes to cost-reduced manufacturing, voxx probably can show the others a trick or two. But in the short term I doubt if this section will ever be > 25% of their total reveue. For the future, I'm hoping that the challenge of the web-enabled phones will allow more R&D effort to take place in voxx --- enough to give RIMM some stiff competition. The nokia and ericsson phones are still better quality, and voxx needs some differentiation other than cost to get some respect. Neat unique features would be good. The 3G or w-cdma standards should make Mbit bw possible on these phones. At that point, phones with touch sensitive big color LCDs should make web access an interesting experience to the weary traveller. Even Goldstar and Sanyo (SANYY [ADR]) (associated with cheap electronic gadgets) after years of research, now have compelling technology that are powering LCD panels and digital still cams. Are you listening voxx?