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Skullcandy, Inc. (SKUL) Message Board

  • goldenseth@ymail.com goldenseth Feb 4, 2013 2:40 PM Flag

    Story of SKUL going forward

    The headset industry is not the entire future for Skullcandy as the company will look forward to evolving into the gaming space with not only headsets but a host of other gaming accessory products. While there is and has been pain for the last year or so, especially if you have been an IPO standout shareholder, the long term story is being under reported by the analyst community due to what some may feel is short-sided analytics. There remains a huge pipeline of growth potential for the company to explore and execute upon.

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    • Seth, I enjoy hearing your perspective as I believe in investing through fundamentals. I actually think the brand and business model are stronger than you and others believe. They are fighting a strong battle to maintain and grow relevancy while maintaining strong margins. Sure there has been some margin compression, which will be offset by sales growth. I do my own channel checks and have confirmed SKUL's relevancy in the market as the #1 provider in earbuds and #2 in headphones. So I believe they have stayed in touch with the market and have a niche in the $50-$150 price range for headphones. I always hear the comment "great headphones for the price".

      So my beef is not with managment's business side, but rather their excessive stock compensation expense which is included in their G&A expense. Not only is it diluting shares, but is impacting the EPS by 15 to 20 cents a share per year (4-5 mil after tax expense). Granted these are now mostly underwater, but that will not change the expense which will continue to amortize. Isn't this excessive for a company this size?

      This high stock comp coupled with the continued insider selling really bothers me and sends a mixed message to investors.

      • 2 Replies to chaz16669
      • goldenseth@ymail.com goldenseth Feb 5, 2013 12:28 PM Flag

        Understood Chaz, and I completely respect the fact that you perform your own channel checks as we encourage all to do. With respect to being the #1 provider in earbuds as they are, the compilation of competitors actually have closed the gap between the market share owned by SKUL and what is owned by others collectively, so either way you look at it, management has work to do and we do believe they have the know how and desire to execute.

        The best part of the current stock compensation and options expenses that pervaded the stock stochastics and earnings metrics in 2012 is that they will likely come down YOY as is already indicated in the Morgan Stanley FY13 report. Don't get me wrong, last year the divergence between revenues & earnings against the stock compensation grants did seem outsized. We'll see what the annual filing offers though and everyone will have a better grasp of what can possibly be expected for FY13.

    • Seth the new Tom Payne! Good article in SA. I hope some of my frustration has inspired you! :).

      Sentiment: Strong Buy

      • 2 Replies to michaelsistowicz
      • coreylynnh@sbcglobal.net coreylynnh Feb 5, 2013 10:57 AM Flag

        Calling Seth the new Tom Payne is not a compliment. That means this stock is destined to drop another 50%. Where is Tom Payne by the way?

      • goldenseth@ymail.com goldenseth Feb 5, 2013 10:25 AM Flag

        Thank you kindly Michael. I've seen these type of stories/investments play out over my years and it always comes down to one thing, relevancy in the consumer's mind. So long as management executes the business plan, which admittedly they have fallen off pace with in the past, the PPS will increase alongside fundamental revenue growth. Market is there for the taking.

        We began investing in SODA last year with the same horribly disenfranchised sentiment and watched a $29.60 PPS turn into a $50 PPS. Guess which retailer was not selling SodaStream at the beginning of 2012, that's right Wal-Mart. Stories are very similar and gains could be also. Good luck Michael and be well!

 
SKUL
7.76-0.03(-0.39%)Oct 22 4:00 PMEDT

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