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Skullcandy, Inc. (SKUL) Message Board

  • michaelsistowicz michaelsistowicz Mar 8, 2013 10:03 AM Flag

    Earnings visibility

    Those two words sum up what has and still does #$%$ the market. Started last year when Andrus wouldn't state or give any firm guidance. Still the same story. Wescoat is still new and scrambling to get a grip on sell through numbers. The storm clouds will part when they start giving tighter ranges and more importantly can firm up revenue numbers.

    They are flying blind right now. They will continue to sell into the market, innovate but Alden is a free spirit and he is not going to give any realistic numbers out, just his "dreams". Once they announce a new CEO that is market savvy and friendly.... Well the story will unfold

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    • spotifyjim@hotmail.co.uk spotifyjim Mar 8, 2013 11:28 AM Flag

      Westcoat being 'new' is no excuse. If anything I'd say it means he should be trying harder to get up to speed. Do you know how much SKUL pay him?! I listened last night and cringed whenever he talked/bumbled. Maybe he's better with numbers than verbal presentation but I was hugely unimpressed.

      Today I'm glad I only invested a throw away piece of my hard earned in SKUL. Invest only what you can afford to lose is how I've always viewed my investments. Stil I have learned an expensive, albeit interesting lesson! My gut feeling is if you're going to hold, you're goimng to have to do so into 2014 to see any recovery here. Eventually they may turn things around but I wouldn't expect anything overnight. And there's a good chance that the turnaround doesn't go as well as management believe it will.

      I was impressed with Rick Alden though and perhaps his enthusiasm will move the company into top gear. By his own admission though, he's not a financial guy and you wonder if his vision is one that will work financially for the company. Seems more committed to the company than ever now, and will be a great help in selecting the right CEO successor.
      A few genuine positives to note though, Walmart soon, increasing margin after Q1, Alden overseas sales growth, gaming division growth, improving/solid cash flow, still minimal debt, and at least some sort of plan for change..

      Can't believe not one analyst asked about stock buy back! And finally, can anyone believe that they've outsourced design of new packaging!!!! Surely to feck they've got a few designers already on the payroll!!!! That one left me gobsmacked.
      .
      Not at all surprised at the price action this morning. They pooped the bed with another key PR exercise and give the impression of a bunch of amateurs. Recovery aint going to happen overnight.

      • 1 Reply to spotifyjim
      • Good points, Spot. Most CFO's are much better decision makers than speakers, so I'd like to think he's providing a benefit behind the scenes. He makes about $300k, so that's not excessive by any means. Rick is the front lines guy and I thought he was solid.

        I would expect their cash to grow. Reduction in inventory for fewer anticipated sales as well as the collection on those $70mil receivables. Alot of their expense is non cash (depreciation, amortization, stock comp) so I don't see cash as a problem just as Westcoat mentioned.

        I still believe. Users still talk favorably about their product, so they haven't lost touch. Just not growing and getting more consumers like they should. Great products wasted on bad marketing approach.

    • Yeah, the market hates the unknown. I think the 2013 will be yet another lost year, and it is hard to see the stock being much more than dead money for the near future. I think you are supposed to buy it in the $4s (~0.5x sales is the floor), and sell it at $6 until they start to show some traction on the new initiatives. It is hard for me to see them doing much more than $250M in revenue and $0.25 in pro forma EPS this year. Not sure where the street went to, but based on Westcoat's quasi guidance in the Q+A, that is what I think is best case. That said, I think that Andrus probably couldn't have run the business any worse, and there is plenty of room for improvement beyond this year. They alluded to adding WMT in early 2014 on the call, which I think will be big, and they said that selling into the more big box type retailers hasn't really hurt sales at the specialty channel so it should be additive. The brand and products are still strong. They still have retailer support. They can rightsize the expense structure around whatever the new baseline of sales is and I think steady state earnings for 2014 and beyond could be anywhere from $0.50 to $1.50, so again I think you can safely buy in the $4s, but I doubt we go too much north of $6 for at least the next quarter. International and gaming are the two wildcards that could materially help the situation.

      Sentiment: Buy

      • 1 Reply to checkoutking2000
      • Unfortunately. There will be nothing but negative speculation into the Q1 earnings by the market. I am wondering if they would propose a sale of the business after they get it on track. Alden has done it before with his snow board binding company (twice actually). Not much more to say until the company gets pro investor and releases some positive news. They put all the #$%$ they could gather into a bucket and flung it out into the world in one shot last night! Your right on the trading range.... Some short selling, Walmart news and a buyback release might get it back on track.... We will see

 
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