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Gold/Mining/Energy : Direct Focus Inc. (DFXI) -- Ignore unavailable to you. Want to Upgrade?

To: Mark Hill who wrote (228)	4/8/1998 10:32:00 AM
From: diddlysquatz	Respond to of 768

Can you believe we hit $12.00 this morning! Cheers, Paul

To: Mark Hill who wrote (228)	4/8/1998 1:36:00 PM
From: Gordo	Read Replies (1) \| Respond to of 768

I finally got a call back from Rod Rice today. We talked about a few things - I'll try to cover them as best as I can here. With regards to the new product, Rod stated that they are just completing their R&D, and working on the molds. Will be shooting an infomercial in the next couple months and then do some consumer testing. Likely launch a campaign in Q3 or Q4. While he would not identify the product, he did indicate that it was a non-fitness product, but still in the lifestyle category and with a $1000+ price point. He felt that this was the right category and price for what he believes to be Bowflex's core competency - that is two step direct marketing. As he described it, two step direct marketing involves sending out free info based on the original inquiry, and then following up with an outbound campaign via either mail or phone to close the sale. I also asked about a retail strategy. Rod agreed that there was a segment of the population that would not buy a product via an infomercial, and that from time to time Bowflex would use retail to alleviate pent up demand, but that this would not be their core focus. His concern was with the lower margins in retail, and the cannibalization of the more profitable direct marketing business. I asked about the potential for a move to NASDAQ. Rod indicating that this is in their plans for the next year, but not until after they have launched their new product, and also he would like to see a little higher price on the stock. He believes that they can't make the move as a one product company. He also believes that they company will warrant a higher multiple with a diversified product line, as the single product focus seems to be a key concern in the investment community. Finally, I asked him about what they plan to do with all the cash they are accumulating (currently well over $4M). Rod stated that developing the new product will use about $0.5M. As for the rest of the cash, they will look at acquisitions, but only if they represent good value. In the mean time, they will invest the cash in securities and short-term financial instruments. If a year from now they are still sitting on a pile of cash, they may look at a dividend back to shareholders, or share buybacks (note: they are not buying back shares at current prices, even though they have a normal course issuer bid out). Well, that's all for now. I guess the next news will come with the release of Q1 financials on April 20. If I read anything into Rod's tone of voice, we should be happy with the numbers. gord