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Dynatronics Corp. Message Board

  • Place_Your_Chips Place_Your_Chips Nov 4, 1998 9:39 PM Flag

    Conference call

    Did anyone catch yesterday's conference call? I
    did:

    Basically the CEO (Cullimore) spent most of the time
    explaining the context behind the projected slow down in 2nd
    quarter sales. He also admitted that they screwed up big
    time by being so overly optimistic about their sales
    and earnings projections last summer - which cost
    many of us a lot of money. Basically, although they
    have a lot of sales 'leads'(i.e. for the synergie
    product), new buyers are reluctant to jump onto the
    bandwagon until there's more proof about the efficacy of
    the product. Supposedly, therefore, first quarter
    sales were the 'early adopters', whereas other
    potential customers are taking a wait and see attitude. To
    this end, Dynatronics is performing a study which they
    started in September to test the effects of the device on
    55
    women. The study is supposed to conclude by
    Thanksgiving, but Cullimore says that the results are very
    impressive - not that DYNT mgmt ever doubted the efficacy of
    the prodcut ;) Where was I - oh yeah, the other thing
    the company is doing is seeking FDA
    'approval'
    for the product, although they apparently don't need
    to submit any tests, it's more of a rubber-stamp
    approval process. Apparently, Dynt's 2 competitors that
    offer similar products already have such FDA
    sanctioning, which has given them an advantage at sales time.
    This FDA approval should come 'any day now'. In
    summary, he said that Dynt was overly optimistic too
    early, but that the market is in its infancy whereas
    they thought it was a more developed market.
    Therefore, more time and sales effort must be invested to
    create a market around this new product. He also said
    that the customers who already have the product think
    it's great and have signed up for more.

    That's
    all I have to say about that.

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    • at this point I'm down 50% so don't feel bad. I'll ride this one out, boom or bust.

    • Opportunity costs cannot be quantified in risky
      investments (i.e. stocks). You could take your money out of
      one stock only to put it into another stock which
      then proceeds to drop in value. The other
      consideration is if you've have held Dynt for several months
      and you have a taxable account, then it may be
      worthwhile to hold past 12 months to get the lower capital
      gains rate. In other words, a small gain in Dynt might
      be worth more than a larger gain somewhere else if
      you can get the preferential tax rate on your Dynt
      investment. I've asked myself the same question in the last
      couple of months, but I am currently more concerned with
      the viability of the company than I am with
      opportunity cost. If Dynt can eventually meet its original
      projections I think the long-term payoff will outweight the
      short term costs. The question is, will we ever get
      there?

    • If the opportunity costs of sitting on this stock
      get too high, what then? This is what I have played
      with. If the stock is going to remain stagnant for
      awhile, why not find some short term growth, and buy back
      in? I have seen stocks that I have watched, but not
      bought into because of holding DYNT take off. I am just
      wondering if the eventual return will be worth the missed
      opportunities. Either way, I have waited for this long, so I
      guess it wont hurt to wait awhile longer, especially
      because I was not expecting super returns until next
      year. I am just thinking out loud, any suggestions?

    • OK, so based on information from the Company
      (finally) we all are in this thing with our eyes wide open.
      Reward is directly proportional to risk. However, from
      what I've seen in their annual report, recent earnings
      statements, and recent teleconference, I still maintain that
      DYNT is a solid long term play and the risk is
      palatable. I will buy more at this level.

    • Place_Your_Chips--Thanks for your report. It
      certainly was a refreshing change from the previous
      cheerleaders. In your opinion, do you still have faith that
      this company will be able to show enough quarter over
      quarter earnings growth in the second half of the fiscal
      year to generate some investor interest? I am
      intrigued by the very recent insider buying at this
      company--but it came mostly from a couple of directors--most
      of the stock they bought was in the $3.00-$4.00
      range. At this small of a company, you would think that
      they would have some insight on the long term
      viability of the company and the propects for growth.


      Also, I would be careful about what DYNT termed "early
      adopters". It is my understanding that DYNT sells mostly to
      distributors and dealers--then, these people actually
      distribute the product to the end user. Since DYNT is
      expecting 2nd quarter sales to be LOWER than the first
      quarter(this is the real problem here, not the five cents this
      quarter), I would presume that DYNT's dealers have too much
      of DYNT's new product in their inventories that
      remain unsold. Hence, their DYNT's 2nd quarter orders
      will be reduced from these dealers or "early
      adopters". These dealers and distributors may believe in
      these products, but as long as the end user remains
      indifferent, DYNT will have problems.

 
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