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Non-Tech : Cannondale Corp. (BIKE) -- Ignore unavailable to you. Want to Upgrade?

To: Daniel who wrote (32)	10/29/1997 10:10:00 PM
From: Fredric D. Bellamy	Respond to of 103

To all: Cannondale beat the analysts' estimate again this quarter: biz.yahoo.com The one cent "surprise" on the upside represented an 11% increase in sales over the same quarter last year, which constitutes an increase of over 20% adjusted for the stronger U.S. dollar. Earnings per share have increased 40% over the prior year's quarter. Despite the decline in domestic sales of mountain bikes, Cannondale keeps growing more profitable. Apparently Cannondale's high-end of the market has been able to grow even while the overall market (in the U.S. at least) shrinks. Obviously this trend stands in pleasant contrast to the downside surprises lately by other companies selling mountain bikes or components.

To: Daniel who wrote (32)	11/5/1997 11:29:00 PM
From: Daniel	Respond to of 103

At fnews.yahoo.com Stock of the Day (Archive) Nov 05, 1997 This Bike Maker Gets Vertical, Dude! The stock chart for Cannondale looks like a bumpy trail ride, with much of this year on a downhill track. The bike industry has been struggling with a slowdown in sales growth, coupled with a proliferation of products and excess inventory. Cannondale is in better shape than most bike makers, though, because it makes primarily high-end models, the segment of the market with the best growth and the widest margins. Indeed, because Cannondale (NASDAQ:BIKE - news) is a premium brand and it uses proprietary components, its bikes grab a 20%-50% premium in price. Only five of its 50-plus models sell for less than $600. The company has a strong presence in both the road and mountain bike markets, used by some of the top riders in each sport. In addition to distinctive bikes, Cannondale has a distinctive business strategy. The phrase "Get vertical" might have some meaning for Cannondale's mountain bike customers, but it also has some meaning on the corporate level. The company has made a dramatic push toward vertical integration, that is manufacturing components in-house instead of relying on outside suppliers as most bike makers do. By last year, 90% of all parts in the typical Cannondale bike are made in-house. When a company makes its own parts, it takes much more control over its own destiny. That means complete control over their design and no supply problems for hot-selling parts that many bike makers now experience. The downside with making your own proprietary parts is if you have a production problem, there is no alternative source to which you can turn, resulting in painful product delays. So far, the strategy has paid off, and it's helped Cannondale's profit margins widen nicely compared to the competition. Gross margins are in the 35% neighborhood versus 25% for most other bike manufacturers. Last week Cannondale reported a 37% increase in net income from the same period a year ago, slightly better than expected, on sales growth of 11%. Some analysts have expressed concern about the sluggish growth in sales, but if not for the effects of a strong U.S. dollar on foreign revenues, sales would have been up 21% in the latest quarter. Nonetheless, the stock has basically gone sideways for more than a year, and the only significant buying interest in the stock came from the company itself -- in September Cannondale announced a 1 million share buyback. There are only 8.7 million shares outstanding, and the float (the number of shares not held by management or otherwise tied up) is just 4.5 million. The sideways action in the stock and the continued growth in sales and earnings has created a situation that value investors may want to investigate further. The Price to Sales Ratio (PSR) is 1.22. The Price/Earnings (P/E) ratio stands at 15.1 using trailing twelve month earnings, or 11.6 using calendar 1998 estimates. According to the First Call survey of earnings estimates, Cannondale is expected to grow 22% in fiscal year 1998 and 20% a year on average over the next five years, so the P/E is barely half the expected growth rate. That's pretty rare these days, even in the wake of the recent market correction. Cannondale's industry is in a bit of a tough period, but its valuation alone makes it a compelling stock to keep an eye on. The fact that it is a premium brand with expanding margins adds to the story. Of course, the companies reliance on overseas sales means foreign currency exposure could be a problem, so the Asian crisis will have to be watched closely. It will also be interesting to see how Cannondale's vertical integration strategy works out, since this is an issue that is getting hashed out in other industries like computer disk drives.