To: Musa Goksel Bulat who wrote (3569 ) 12/13/1997 1:26:00 PM From: Mosko Read Replies (1) | Respond to
Musa,
Thank you for bringing this up. I have been long VVUS since march, and I too listened to the conference call. It seemed to me that the analyst never got a straight answer out of the CEO concerning how the shutdown of the plant equated a 25% shortfall in revenue when the wholesalers were supposedly stocked with a 45 day supply.
I thought they were sincere and am willing to take this on face value. Management is definitely going through growing pains. But, I think everyone here is looking through rose colored glasses concerning future projections. I believe your projections, Musa for the december shutdown could be right on the money. What I got from them was that with the decreased capacity at plant 1 and plant 2 not coming on line until Q2 that they would not be returning to production at oct. levels (800,000 units) until Q2. Yes, they did say that they were looking at methods of improving yields, but this sounded pretty iffy in the time line.
From this I would project earnings from Q3 97 to be .24 not much better for Q1 because of dec shutdown ----Q1 98-----.25
After that everything should be back to normal and we have an ad campaign, but somewhere along the line Viagra is released and previous VVUS patients pause to try it and see if it works for them. I would say this would be adverse for probably Q3, let's say it would have a 25% decrease on domestinc sales, hopefully offset by sales overseas.
So we have 2 quarters of reduced earnings, followed by another quarter of flat earnings before returning to the growth picture that everyone bought this stock for. In addition to that the street is going to have a "show me" approach, basically guilty until proven innocent.
It's your basic long uphill climb. I think a previous poster got this one right when he said he was going to buy for his 401K at these levels and forget about it.
Still Long, but just went from long to longer!
Mosko
