Any thoughts on Bruce Rogers as the new VP of Americas & Asia Sales and Marketing? He seems to have a solid background within Data I/O, so he knows the products, the business strtegy, the competition and the customer base.
I'm also impressed that he has served as President of Data I/O Japan. With China being the "hub" of electronics manufacturing and Japanese electronics and semi-conductor factories now encircling Shanghai, his knowledge of working effectively in over-seas markets should be a major asset.
Is Bruce Rogers an effective leader? Who does he replace? Any ideas of why the change? I'd appreciate hearing any thoughts or perspective via e-mail or the chatboard.
Good luck to everyone.
Commando, I don't think Leviticus is the "momentum buyer" you think they are. I think they are in for the long term.
"The basic tenet of Leviticus is that with extensive fundamental research it can identify investment opportunities that are overlooked by other investors due to lack of analyst coverage. An investment is initiated when the Fund believes that the target company�s stock does not reflect its growth prospects and trades at a discount to its intrinsic value."
I'll add a few thoughts...
Commandor58 may be right that DAIO could get pulled into the $2.50 per share range. Bisco will be putting one million shares onto the market. Fred Hume may add another hundred thousand beyond that. That is a lot of sell orders for a lightly traded stock. Commandor58 and Shoredaddy are correct that Q4 was a "major miss" on earnings and there will be no buying momentum based on that upcoming earnings release.
The Q4 earnings, however, are now "old news" and the stock is still trading solidly at $3.25 per share. There was a 50,000 share buy order that sat unfilled all afternoon today.
Why? I believe DAIO's market position and market sector are both gaining momentum. In spite of the weak Q4 earnings, at least two of us believe the company is still fundamentally undervalued at the $3.25 level.
We don't know if today's 50,000 share buyer wants to acquire 50,000 shares, 500,000 or 2 million shares. That buyer, or just one or two more like him, can can make it relatively easy for Bisco, Leviticus or any other major shareholders to sell out their positions.
Another positive DAIO indicator is that the share price was up today when the NASDAQ, including every other stock in my portfolio, was being sucked down a funnel. Other than Bisco's planned sale, existing DAIO shareholders are not exactly panicing for the exits.
Commandor58 has been studying this stock far longer than I have. I respect his opinion. Different perspectives, however, are what makes investing fun and challenging.
Good luck to everyone.
I couldn't disagree more with your assessment.
1st, the sec filing announcing Bisco's sale is likely to result in DAIO shares ending up in stronger hands and will lift the constant selling pressure...I doubt we'll see your $2.50 price...to the contrary, once the disappointing Q4 passes (which I do agree was a major miss), I believe DAIO will begin streghtening again.
2nd, Leviticus will have ample time to exit as DAIO's shares respond to positive earnings in '05 and beyond. I seriously doubt they took a position based on a buy-out being the only exit possible...makes no sense.
3rd, DAIO is just beginning it's migration into the ISP market. This is where the big opportunities lay and re-hiring "old-time" IO'ers to design the offering...Hume once "insinuated" the ISP strategy wasn't a "wing and a prayer"....
Time will tell...not many "predicters" on this board have been right...
My apologies for the confusion. What I wrote was "Q4 revenues will be in line with Q1,Q2, 03 Q4." meaning revenues will be in line with the first and second quarter of 2004 and the fourth quarter in 2003. The 03 in front of Q4 means 2003. I said nothing about the Q3. I guess you figured it was a typo and I meant Q3 instead of 03? That's probable, IMO.
Your right! Revenues this quarter will be in line with "depressed revenues from the tech sales and earnings bust of 2001-2003." So weren't Q1, Q2, and 2003 Q4! Remember, DAIO managed to make .15/share from the "depressed" revenues of 2003. Not bad.
Regardless, it's obvious Q4 results will be less than what was hoped for. I'd be delighted if DAIO could replicate last years 3 quarters when revenue came in at 5.6, 6.2 and 6.4 while earning .04 per share each quarter. I highly doubt it because of the operating costs in China and Brazil. Whatever the case, I'm comfortably over it. I like DAIO, even today. Looking forward, I like it even more.
If you think DAIO is "dead money for a couple Q's or so" and headed toward $2.50 why not move your money elsewhere? To continue to be a long is foolish, isn't it?
1. Q4 revenues will be in line with Q1,Q2, 03 Q4.
2.Bullish guidance for '05.
"We continue to expect 2005 to be a very good year for the company, as we benefit from our 2004 and 2005 initiatives including new product introductions, increased customer penetration, and the establishment of Data I/O China and Data I/O Brazil," he said.
2.Restructuring payments almost completed. 200k or .02/share balance remains. Projected savings of 1.1m/year or .12/share/year. Regarding restructuring, expect a wash this quarter as roughly 200k in savings will compensate for the 200k payment. Benefits from restructuring start in Q1.
3.Looking to 2005. If net income (minus the restructuring charges)from continuing ops remains flat to the prior year at 1.52m. Add the projected 1.1m/year savings= 2.62m net income from ops. That equals earnings of .33/share and a PE of 10.6. Not bad considering the prospects for growth.
4.International sales driving growth. International sales grew 35% in the first nine months of '04. Expect the establishment of DAIO China and DAIO Brazil to accelerate the growth in '05.
5. The above+6.23m cash+no debt=strong buy.
Regarding Fred Hume's recent registration to sell 100,000 shares, I stumbled across one more piece of the puzzle that is noteworthy.
I was not aware that Mr. Hume, who has served as CEO since 1999, has a block of options that will expire in February of 2005 unless they are exercised. It is likely he will need to sell some shares to pay DAIO the strike price when the options are exercised and then to pay related income taxes that will be due to the IRS.
In light of his expiring options, the filing to sell some shares is perfectly reasonable and makes good sense.
Good luck to everyone.
It is remarkable that Data I/O's stock price held up above the $3 level given the double whammy of news on December 22:
1). A DAIO warning that Fourth Quarter revenues will be well below previous projections.
2). Bisco registering with the SEC to sell one million DAIO shares and Fred Hume registering to sell 100,000 shares. Having both the CEO and the company's largest shareholder, who also sits on the Board of Directors, announce they are selling significant blocks on the same day would cause a downdraft in most lightly traded tech stocks.
To Fred Hume's credit, he has served at the helm of Data I/O over five years and I believe this may be the first time he's sold any of his shares. His filing simply gives him the option to exercise options and sell 100,000 shares... but doesn't mean he has to or necessarily will.
Likewise Glenn Ceiley has been consistently reducing his DAIO position over the past two years... regardless of whether the stock price moved higher or lower. Glenn has two major business responsibilities in his Bisco Industries and restaraunt chain in Florida. He has been DAIO's largest investor for over five years but its understandable why he would want to move on to new investment oppoturunities. While selling that block could put some short term downward pressure on the share price, DAIO will be in a stronger position when those million shares are in the hands of an investor intent on holding them long term.
Today's steep drop seemed to be caused by one larger sell order with no buyers in place to match it. That sale may have been tax related... and that pressure will be over after tomorrow's trading session.
While Commodore may be correct in a drop to the $2.50 range, I'm hopeful shareholder confidence is strong enough to keep shares in the $3 range.
In the long run, it will be the successful execution of the company's new business plan, not individual plans to sell shares, that will determine the value of our investment in DAIO.
Good luck to everyone.
Fuji - good post. Yep, I'm one of the multitude of Data I/O investors who are in for the long haul... as long as that is measured in years and not decades. The first time I invested in DAIO was back in 1993 and I sold in 1995 for more than twice today's price. Take a look at the yahoo max. chart. It doesn't inspire one to view this company as a buy and hold forever investment. The business has too many ups and downs. That said, I agree with your assessment of the leadership and also believe that 2005 could be a breakout year. Of course it might not come until 2006. When it does, I think optimism will send the stock price up to $5 to $6 and some of our long-term investors will start taking some money off the table. At least that's my plan. I sure hope we get there. In the meantime, I don't plan to bail just because a few sales slide to the right.
Good luck. I think I'll go grab a Washington apple from the kitchen and toast (crunch) to the success of my fellow DAIO investors.
Hang tough - we will be rewarded from these levels.
I have invested in DAIO for the long term and am still very optimistic about the company's long term prospects.
Even an optimist, however, has to admit today's announcement that Fourth quarter revenues would be in the $6 to $6.5 million range vs. $7.9 in the Third Quarter, $6.9 in the Second Quarter and $6.8 in the First Quarter was an unexpected hiccup in the DAIO turnaround gameplan.
Today's news comes on the heels of last week's announcement that Joe Murdica, who was brought in as VP of North American and Asian marketing on March 1, is no longer with the company. While Bruce Rodgers is a great replacement, having to make a switch in that key leadership position was not on any investor's wish list.
There are silver linings to everything in life, and this is no exception. One positive is the "bad news" did not cause a major panic to the exits among shareholders.
85,000 shares traded today and the stock price closed down a mere $.13. There are not many company's who miss revenue guidance by over 20% who can demonstrate that kind of downside resiliancy. I believe this is an indicator that the vast majority of remaining DAIO shareholders are in for the long haul. Any remaining short term traders were likely gone after the first 30 minutes of trading this morning.
Several of DAIO's high capacity machines sell for $200,000 to $500,000 each... and there are very short lead times between orders and deliveries. This makes it extremely hard to project revenues on a quarter to quarter basis. As Fred Hume has pointed out, a few orders sliding from one quarter to the next has a major impact on quarterly revenues. The Third Quarter results benefited from some large orders that came in late and were shipped near the end of the quarter... which spiked revenues to $7.9 million. It appears that scenerio will not repeat itself over the Christmas holiday.
From my viewpoint, DAIO still has the leadership position in a growing market, a number of new, high margin products coming onto the market, a very solid global business plan, a financially healthy customer base, a very solid staff and management team and last but not least, a capable CEO who knows his products, his customers and his competition. I believe Fred Hume also knows how to build strong teams... and in the long run that skill will be a huge factor in the long term success, or lack thereof, at Data I/O.
Success requires patience and persistence. That principle applies to DAIO leaders, staff and though we too often forget it, investors. The company is over-due for a "break-out" year. My hunch is 2005 may be it.
Good luck to everyone.