Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : LEIX Lowrance Electronics a GPS Sleeper? -- Ignore unavailable to you. Want to Upgrade?

To: Leo Francis who wrote (1)	2/20/1998 6:56:00 PM
From: jopawa	Read Replies (1) \| Respond to of 186

Leo, Just out of curiosity, how did you find out about this stock? As I'm sure you know, small undiscovered stocks don't come in a dream, people must learn of them and take a particular interest in them. I have never heard of this stock, but I do own NSCP, and that is where you so artfully posted your interest in this one. I'm a fan of small undiscovered stocks, because if you do your homework and stay patient, there is a tremendous amount of money to be made, as long as you don't try and trade 'em. Good luck. John

To: Leo Francis who wrote (1)	2/21/1998 3:51:00 PM
From: mph	Read Replies (1) \| Respond to of 186

Hi Leo: Are these systems the kind that are being installed in the new Cadillac STS or for some other purpose? I was just browsing and lurking on the S3 thread and noticed your link to this one. Haven't had a chance to check LEIX out yet, but was just curious...mph

To: Leo Francis who wrote (1)	2/21/1998 5:40:00 PM
From: Jan A. Van Hummel	Read Replies (1) \| Respond to of 186

Leo, In reading management discussion of the 10-k and the most recent 10-q as well as the financial data I see mostly red flags. This is a seasonal business with the third quarter making or breaking the year. Production is mostly based on forecasts. During the high season in general and especially now the company is strapped for cash delaying payments to vendors, never a good thing. The sonar market in NA is mature. Only if the company can increase its market share and/or can become more international will there be growth in sales. The GPS market is expected to expand but LEIX's success in contingent on the company keeping pace with its competitors. Sonar sales are falling, GPS sales are increasing. Margins have been eroding significantly in 1997 (compare Cost of sales, which 65.9 %, 66.2 % and 74.3 % for 1995, 1996 and 1997 respectively). Qualified labor problems at the Tulsa plant and difficulties in the startup in Mexico (this will create bigger headaches in the future). They missed the season in 1997. First qtr was only slightly better if you consider that total costs decreased by $1,379,000 primarily the result of substantially lower advertising and marketing expenses. So no real improvement yet. Also, cutting back in these areas will have some effect on sales in the future. The problems, they promised to address at the end of fiscal 97 (7-31-97), still existed at the end of the first qtr of fiscal 98. They are tied hands and feet because of lack of finance having maxed out on credit line and other arrangements. They cannot afford much more bad luck. At the current price, the market value is a little over 2.6 times book value, quite generous. Given the position the company is in it is highly unlikely it will trade at higher multiples any time soon. For this to be a four-bagger or five-bagger sales and profits must start growing at a very high rate and very soon. If they want more market share they either need to offer a superior product or a like product at a cheaper price. Difficult to see where the growth will be coming from. Let's assume there will be stronger growth and the stock may trade at 4 times book. If the stock is to reach say $30/share (a four-bagger), book would be $7.5/share or $22.5, so they will have to earn $13.5 mm very fast. How long would that take? I am also concerned about their inability to control production at Tulsa and missing the season altogether. Aside from problems they will encounter in Mexico, this was not to time to embark on that venture. While labor cost may be lower, by the time you get the plant up and running with the skilled labor they can't even find in Tulsa, any advantage may well be gone. I am familiar with a few instances where that occurred. Finally, there is no liquidity in its stock. If 100 shares can make it drop 1/4, imagine you are pressed to sell a few thousand shares. Frankly, I see little good happening here any time soon. There are better places to go. JMHO Jan