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Skullcandy, Inc. (SKUL) Message Board

  • chaz16669 chaz16669 Dec 31, 2012 11:25 AM Flag

    Year End Thoughts

    I would have bet my life savings this summer that Skul would not finish the year under or around $8 per share. Unbelievable turn of events...starting with the release of the Apple ear pods in September which dropped the stock a few points. That event seems to be mostly a non factor to Skul, but nonetheless a stock hit.

    A 3Q earnings meet and a lowered EPS really tanked the stock even with the covering of 5 mil shares. Has any stock ever dropped 50% despite a short covering of 40% of the float? Stock manipulation or does big money have some sort of crystal ball and know that much more than the rest of us?

    I actually think 4Q will meet sales estimates and exceed EPS estimates. And for reasons that have plagued them throughout 2012...G&A expenses will drop. Foreign exchange gains should produce some EPS with the Euro up big in 4Q. With the significant drop in share price, the stock compensation expense should be lower in 4Q. Previous amounts which were expensed during the year (as discussed in its quarterly reports) would be reversed plus the actual lower amount booked for 4Q could reduce 4Q G&A a good bit. I can't decipher the exact treatment from the SEC reports, but there should be some impact. Their stock comp is a factor of EPS and share price....both of which have not met their expectations which would lower the expense. Plus granting any stock at $8 versus $16 is certainly less expensive to Skul.

    My concerns would be lower than guided margins, sales, EPS...or anything...purely based on how the 3Q earnings call went...a total disaster that rocked investor faith in management. We need some assurance that what they're saying is believable.

    Hopefully it's tax loss selling today and 2013 sees a rebound.

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    • In my humble opinion... and I say this having a huge stake both in shares and in my financial health here...

      The set up for the decline started at the IPO. It was not well structured and many on Wall Street got burned. It didn't help that Mitch Edwards (the CFO at the time of the initial public offering) resigned shortly after the IPO and there was much public questioning followed by Mitch making statements about how the IPO was botched. He left spur of the moment.

      The above event was the catalyst of the stocks decline.

      I also have noted that there is a significant number of diluted shares being pumped into the market as part of compensation to officers and board members / initial investor groups. The stock fell out of favor with Wall Street, and the market has had a hard time absorbing all these new shares (when some Institutional buyers have fled following the "broken IPO" buzz (and it was just that "buzz", go figure coming out of the smoke shack in Park City)).

      Add to this comments by the likes of Jim Cramer who has scared away retail investment absorbing new shares insider and institutional selling, this set up the shorts to be able to cover without driving up the price.

      The books looked relatively good but (as Chaz has stated) G&A and inventory was focused on by the doubters. There WAS a huge inventory and I can honestly say I still see 2009 inventory being deep discounted once in awhile on the web site during their 30 for 30% or 40 for 40% off day sales online.

      Now the positive...

      Insider selling has come down to a trickle... Andrus has got the clue and his last filing was for a small 5000 shares. What people seem not to grasp is that Andrus didn't take any salary for the first 2 years of his employment at SKUL after graduating from Harvard and lived in his parents house! He was granted future stock compensation at the time and (foolishly in my opinion) took full advantage of cashing in when the company went public.

      The inventories have (hopefully) gone down, expenses reigned in. The stock has been absorbed by new investors.

      I fully expect a professional earnings call in February (one can hope after the botched 4Q call) with some positive earnings results.

      We will see...

      Sentiment: Strong Buy

      • 1 Reply to michaelsistowicz
      • I have been long SKUL myself, and agree with everything you just worte. I think the SUPRISE which most people including myself didnt focus on was the growth in international sales and the new joint venture in Mexico. I believe the next earnings release will show the growth and if you look at the financials they have been increasing share holder value every quarter. I shopped around this Christmas and found there product at (3) different retail stores and I also asked the sales people how their product was selling and all (3) confirmed a good robust sales for their product. I also picked up there Hesh #2 headphones and Iphone headsets for gifts. Until earnings release it is up in the air as the price. A few days ago it made a perfect Inverted Hammer which should have shot it up but alas our Congress decided to go to the podium and the entire market sold off.

    • picked up 500 believing much the same ..Just ten minutes back at 7.80.....Final tax selling push down is what we're seeing today...

    • Tax loss selling is over, the trades won't be settled until 2013.... so its not tax selling....

      This company perplexes me, I feel it is far too easy to look at SKUL's fundamentals and say that this should be trading at at least 15 P/E.... but its not? And it takes huge hits for no reason almost all the time... My strategy going in was a short squeeze play @14.00. It didn't happen....

      I really can't believe what's going on here. But in the end I think fundamentals will win, but perhaps that will take until 2014!!

      Sentiment: Strong Buy

 
SKUL
8.29-0.23(-2.70%)Apr 15 4:00 PMEDT

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