Once again, the brilliant over-paid stock analysts "down grade" after the fact.
Listen, this stock price should've been hovering around $20-30's, not at $10. The economy is tough, NLS will have moderate earnings growth, not astronomical growth like 2 yrs ago. Be reasonable in expectation in this kind of economic recession.
"Leaving your emotions out of this, the substantial rise in direct gross margins in 2002 over 2001 neatly demolishes your theory that Bowflex gms are falling."
Try to stay on target my anonymous friend.
The "theory" is a projection that gross margins will fall after competitors can build & sell without regard to a then-expired patent. The 10-Q margin numbers are just fine as long as they last. I think they won't.
Here is a reminder of what I posted, so you won't have to go back and check. Clearly a projection into the future while recognizing the past:
The proof of franchise value is the ability to sustain higher gross margins compared to competitors' similar products. They did this for a time, but with the rod patents going away, a new blast of near-equivalent competative products is simple to project. This will drive unit pricing down. If the Bowflex product is the true "Gucci handbag" compared to "China knock outs", patent protection wouldn't be needed; while its great to have while it lasts, the Bowflex brand alone should support the higher pricing (franchise value). Once the patents are gone, I don't see this happening anymore except possibly at the very highest end of the market.
"Next time why don't you check the facts *before* posting?"
I see nothing in my post that is contrary to the facts. You should consider reading posts more carefully before you respond to them. If you had you wouldn't have made such an obvious error.
Perhaps you'd care to discuss the investment merits of NLS? I'd be interested in a well thought out opinion.
Have a nice day.
how about this you dork , what do you know about anything , lay some knowledge on us thats pertanant , so we can sell or buy , your an
(and if you want to take it a step further what are the net margins? and where are they heading)
Leaving your emotions out of this, the substantial rise in direct gross margins in 2002 over 2001 neatly demolishes your theory that Bowflex gms are falling.
Next time why don't you check the facts *before* posting?
The issue has always been one of market size and franchise value. If competitors can build & sell the same basic "rod" machines, then return on capital will eventually drop to around cost of capital. No incremental value added by brand, so the business is no better then any other making the same things.
At some point unit growth must slow as market saturation gets closer. With competitors taking share or alternatively forcing a price war, unit pricing softens.
This is not to say that at any price NLS isn't a decent buy. It's figuring out what it's really worth is the challenge. The price has been sliding for a while now and may be OK if conservative earnings power estimates suggest long-term earnings & cash flow will at least maintain. But at what level? And will the actual cash returns be sufficient to compensate for the risk taken?