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Skullcandy, Inc. (SKUL) Message Board

  • charlesmoscoe charlesmoscoe Jun 23, 2013 11:51 PM Flag

    Value of Astro

    Just read an article that says expected Astro sales of $40m for 2013. Interesting because Skullcandy has generally not broken down these numbers. So this is a great piece of information. With profit margins around 25%, that is $10m in profit for 2013 from Astro. With the rapid growth and reputation of the brand (going from $1.5m in sales in 2007 to $40m in 2013) and gaming in general, you gotta slap a 20 P/E on this brand, making it worth $200m, significantly more than the current Skullcandy market cap. Very compelling value play here for a company with zero debt and $30m in cash last quarter, in the midst of a turnaround. Skullcandy has its haters (although a TON of lovers also) but I've never heard a single bad thing about Astro and it has a diehard following. If I were running the company, I would either spin off or sell Astro. Maybe this is in the works as there is still no talk about the Astro offices in San Fran being moved to Utah with the rest of the company. Skullcandy Gaming looks like a winner in the low and mid-range and I've read reviews where the PLYR 1 is compared favorably with the much more expensive Astro A-50. Skullcandy does not need Astro anymore and its always a good idea to sell something on the way up. They could finance a share buyback without having to take on debt and could really accelerate this turnaround story with this cash. Just my 2 cents...

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    • I chose a very conservative estimated profit margin for Astro. When Skullcandy bought Astro, their profit margin hovered around 30%, and its probably closer to 40% or higher right now. But I am using 25% for a net profit margin and $10m in net profit as my estimate for 2013. It could easily be $15m in net profit, which would value Astro at about double the entire market cap of the parent company, Skullcandy. Shocking really.

    • By accelerate the turnaround, what I mean is they can put some cash towards the hot markets Hoby referred to on the last call. Like cloud based music headphones that don't need to be connected to a device and the wireless bluetooth speakers. All of this could easily be launched with this cash and distribution could be stepped up along with having a nice cash cushion to shield against any setbacks. Lines of credit can be cancelled, saving even more money. Seems like a prudent move to me.

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

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