Regarding FCSE:
First off, let me say that I think it is good to see people questioning stocks that other people bring up for discussion. This way, we might actually be able to evaluate a stock on its own merit rather than hype. Also, I do not yet have a position in this stock. I am watching it to see what happens just like other people. That said, I'll go ahead and give reasons as to why one should buy or stay away from this stock:
I'll start off with the negatives first:
1) Someone has stated that the CEO is "slippery". While I don't know if this is true or not, that's not a good reputation to have.
2) Dave, you stated that you have dealt with significantly better products on the market. I really can't argue with firsthand experience. However, have you been able to evaluate their new product that starting shipping in late Jan? See the positives section for what they state in their news releases about this subject...
3) They had a horrible 4th quarter. I believe that they lost .18 per share. From biz.yahoo.com this horrible result was due to "... the income loss in fiscal 1997 was primarily due to unanticipated production delays of the company's FS300 digital video co-processor in the fourth quarter of 1997, the returns of 1st generation PC to TV products to increase channel opportunity for FS300 based products, and increased reserves for non related FS 300 based PC to TV consumer products."
4) Earnings are going to be released tomorrow. If bad, this stock will tumble even more.
Ok, so what are the reasons to buy this stock - or at least reasons to watch it closely?
Positives:
1) The FS 300 video co-processor (the delay of which partially caused the huge loss in the 4th qtr) has been shipping since late January. From biz.yahoo.com : "The new TView FS300 digital video co-processor is currently the most flexible PC-to-TV video convergence chip in the market since it works with TVs, PCs, or set-top boxes to display computer images without any additional software drivers, or external circuitry. It is the
only such product available which does not require software to be VGA chip independent, making integration of FOCUS technology easier
and more cost effective than other competitive products. The technology is truly plug and play since it can accommodate any refresh rate up to 90HZ, as opposed to PC-to-TV solutions from recent competitors that accommodate up to 60HZ refresh rates. The FOCUS FS300
digital video co-processor is the only PC-to-TV encoder that supports resolutions of 640 x 480, 800 x 600, and 1024 x 768. Recently
announced competitive devices can only support resolutions up to 800 x 600. The FOCUS single solution convergence chip also provides
underscaling, compression, and visibility at levels exceeding all competitive products.
FOCUS Enhancements OEM / licensing group has established PC-to-TV video convergence technology partnerships with companies such
as Philips, Fairchild Semiconductor, PictureTel, Zenith, and Apple Computer. The Company has received very positive feedback from
target OEM partners on the superior video quality, and performance of the TView FS300 PC-to-TV ASIC. The Company plans to announce additional OEM PC-to-TV video convergence agreements, and FS300 Distribution Agreements in the near future."
This should hopefully address problem #2 above a little bit.
As well, from biz.yahoo.com : "FOCUS Enhancements, Inc. (NASDAQ:FCSE - news, FCSEW - news) announced today that the improved quality and lower price point of FOCUS's FS300 digital video co-processor have driven the acceptance of the company's TView(r) Gold(TM) PC-to-TV video converter by national computer retailers. CompUSA, Micro Center and Fry's Electronics began the retail launch of the TView gold this quarter into 340 retail storefronts nationwide. FOCUS 1997 retail sales did not include the higher price point TView Gold product. Most of FOCUS 1997 retail sales were generated by much lower end $99 TView Micro."
Hopefully, this should generate more revenues, such that this qtr wouldn't as bad as last qtr.
Now let's look at some statements from the latest 10KSB filed on March 31: sec.yahoo.com
* "Net Sales. Net sales for the year ended December 31, 1997 were $21,026,011, as compared with $15,076,368 for the year ended
December 31, 1996, an increase of $5,949,643, or 39%. During the year ended December 31, 1997, the Company realized significant
growth in sales to US resellers (an increase of 33%), in sales to OEM customers (an increase of 78%) and in sales to international resellers
(an increase of 24%)."
* "The Company realized significant growth in sales to its domestic distributors, resellers and VARs for 1997 as compared to 1996. Net sales to domestic distributors, resellers and VARs for 1997 were approximately $10,845,000 as compared to approximately $8,142,000 for
1996, an increase of $2,703,000 or 33%. Net sales included sales to a major distributor totalling approximately $3,319,000 or 16% of net
sales in 1997 and $2,287,000 or 15% of net sales in 1996. The increase is the result of greater acceptance by the marketplace of the
Company's PC-to-TV video conversion products. Net sales to international distributors and resellers for 1997 were approximately
$2,969,000 as compared to approximately $2,393,000 for the 1996, an increase of $576,000 or 24%."
These statements would seem to be somewhat positive, with nice growth rates in sales.
2) Since last quarter, they have signed numerous distribution agreements:
* Staples: biz.yahoo.com
* Computer City: biz.yahoo.com
* Philips Electronics: biz.yahoo.com
* Other: biz.yahoo.com
biz.yahoo.com
biz.yahoo.com
3) As of last January, they were the market leader in this industry with a 45% Market Share: biz.yahoo.com
4) This is at the end of most of their press releases, although I know little about it: "In addition, the Company is developing a family of products that will enable the current installed base of televisions, VCRs, and camcorders to remain functional in
upcoming HDTV environments." This would seem to be a huge market in the next few years.
Anyhow, this is some of the information that I looked through before stating anything about this company. I have been watching FCSE for several weeks to see if all of these news releases are just hype, or if they will actually affect the bottom line. Since earnings are coming out tomorrow, this is why I suggest people watch it. If the earnings are good, this stock may make a turnaround based on all of the positive developments in the past few months.
I hope that this information will enable you and everyone else to make an informed decision about this company's prospects.
John |
