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Skullcandy, Inc. (SKUL) Message Board

  • superbowl6wins superbowl6wins Mar 10, 2013 11:54 AM Flag

    1Q Write-offs

    I am no expert by any means but I can connect the dots and spot a "red Flag". After reading the last few SEC filings it looks like some major changes are about to take place in the company mgmt. After looking at the Q4 earnings which only missed by less than 3% and the revenue beat the estimates the Q1 guidance of -(.30) can only mean that they expect to clean-up their act and writeoff alot of inventory, taking the pain all in 1Q. If things were that bad they wouldn't have 10 job postings on their web site. I think the selloff of 22% may be overdone so for the first time I ever held SKUL I put a buy in when the volume slowed down indicating the knife has stopped falling. The stock may stop dropping or go up Monday, nobody can guess the top or bottom, but the bad news is already out and worked in the PPS and chances are there is more good news coming than bad. Just my take.

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    • redheadinvestor@ymail.com redheadinvestor Mar 10, 2013 4:32 PM Flag

      Are we both Pittsburghers?

      • 1 Reply to redheadinvestor
      • Are we both Pittsburghers?

        I guess so, Bethel Park. I rewrote the last message so you could better understand it!

        Great post "redhead" ! But jest a little clear so dere is no misunderstanding, I have nothing agin T/A , alls I'am saying is it's one toll in da tollbox and I try to use dem alls. I pay more attention to da people that don't agree wit me and wah da negatives are. I'am sure I use TA witout even realizing it cuz it is important but its not da only ting as some of my buddies seem to think. dere are many tings that are not in print or numbers which also can be considered. I sometimes tell my TA friends I hafta check da "clouds in my coffee" before I make investment fer fun but if TA works best fer yinz ats great! Less

    • ".... nobody can guess the top or bottom...."

      Perhaps, but there is valuable information given by the chart.. Check the 4th 30-min period candle on Fryday that printed the low, $5.06. There was 887k traded in that 30-min period. It was a stopping-action candle. Do you think it is going to sell down below $5.06 on more than 887k on a 30-min basis Monday? I don't. It will be lucky to get that volume for the whole day. It may get under $5.06 but the volume will be way less. So, if it does go lower, it will be a buy......price will levitate back to the high-volume price.

      • 2 Replies to onepoint272
      • redheadinvestor@ymail.com redheadinvestor Mar 10, 2013 3:19 PM Flag

        I've considered the same questions and am more conservative than both of you.

        First, the market cap is about $144 M now, but NTAV is about $117 M and after a loss of $0.30 per share it will be at most $108 M. I am not claiming that salvage value is "the way" to value SKUL, only taking a conservative approach given the total absence of forward guidance - using it as something an investor can count on.

        Second, $0.30 per share is "only" $9 M (that's how I get from 117 to 108 B/S NTAV). The inventory level is high and has grown, so $9 M is not a significant writedown of that inventory. $9 M will be an operating loss driven mainly by the collapse of HMV and the 30% sales hit. It's not an inventory writeoff.

        Third, there will be capex. The product will be rebranded and repositioned and The Man decided that there will be no move downmarket. While capex amount is uncertain, and management is competent (now), capex will be significant. This dings the B/S and NTAV even more. Wild guess: Call it $18 M for a new NTAV of $90 M. (Could be 5, or 30; it ain't 0).

        So even at $5.20 we have a troubled loss making company trading at 1.6X foreseeable NTAV. That is not a no-brainer discount - it is not "cheap". It is only 6X TTME but what matters is FTME, not TTME.

        What was GAAP NI in 2011 and 2012? $19 M and $26 M. Hmmmm: 2013 won't be a growth year, it will be a lot worse than 2012. We have retooling and a 30% revenue hit that will take time to rebuild. Let's say the first four quarters of forward twelve months' profit, when profit returns (? when? no guidance) are $10 M (remember! 30% revenue hit!

      • Sorry, i don't believe in T/A. I do believe in charts to a point but I don't get carried away with them because they don't allow for "News" or many other factors like writing off all the losses and bad inventory in Q1 and maybe buying back some of that stock as others have stated while the PPS is low. $28million will buy alot of shares of a 5 dollar stock!

 
SKUL
8.43-0.20(-2.32%)Apr 17 4:00 PMEDT

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