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Skullcandy, Inc. Message Board

  • onepoint272 onepoint272 Oct 20, 2012 1:50 PM Flag

    Fundamental Inflection Point?

    So, I assume you've read the recent Seeking Alpha article by Inflection Point Investing, LLC. Here are some highlights:

    * Target Stores lowerd prices on Ink'd product
    * Radio Shack offering 30% discounts on Skullcandy products
    * Suggests inventory build up ultimately leading to lower profit margins and possibly no profit at all
    * A number of new entrants in this space recently
    * Dr. Dre continues to gain share
    * Sony, Panasonic, Motorola, Sennheiser have all flooded market with offerings
    * Suggest that longs view offerings on Amazon to gain an understanding of competition
    * Admits proliferation of smartphones but questions how SKUL can differentiate itself without a proprietary technology [I've been telling ya, check out KOSS].
    * Current 2013 estimates are WAY TOO HIGH
    * Excess inventory will only build from here
    * Too much product out there and not enough demand
    * The above 2 points are a deadly combination
    * Company's negative inflection point has arrived from a fundamental perspective
    * 2013 estimates will get cut
    * Eventual stock price $6 to $7

    And I've been saying for long while that $9 is inevitable, wow. Funny to see how many of the cheerleaders have abandoned the board since I first said that.

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    • you must work at inflection point seeing as 'point' is in your moniker ...nice hatchet job there as the author uses "we" to make him sound like a big firm. Hope instant karma gets shorts in a major way.

    • I understand how he got to these conclusions, but I think he's wrong. He's piggy backing off one or two analysts opinions which I also believe were inadequately researched and concluded. Not ignoring the possibility of above highlights happening, but I don't think ANYONE today has enough facts and info to conclude Skull is heading in the direction as suggested.

      Does anyone believe Radio Shack or one model going on sale at Target for a brief time period is an indicator of an entire company's inventory trend? Sure if inventory balloons from here on out that's a problem, but how can one conclude that as of today? I take the position that they ramped up on inventory for all their new products and for international growth and are prepared for the holiday demand and increased sales. Based on what we know today, this can happen just the same.

      Sure competition is tough, but who's to say Skull is not holding their own or gaining market share, especially when Astro gaming and international markets are factored in? I still believe their business model is strong and they have done a great job focussing on their target market. Others will come and go, but as long as Skull produces a quality product for their audience and stands by their product (warranty program), their image and business will succeed; consumers want a brand that has been and will be around and backs their product.

      Not sure what this means to the short term EPS, but as a long investor of the compay, I'm relying on the fundamentals to drive the eps up. But that will take time as the headphone market still has alot of shaking up to do.

      OP - You and I as middle aged men might prefer Koss and other conservative cans, but that's not Skull's target market. And Skull makes well enough quality product to hold an audience that likes fashion and variety. This young demo will always be around.

      • 1 Reply to chaz16669
      • A couple other points.

        i think Skull with make 3-4 cents per share Q3 on foreign exchange gains based on the rise in the Euro.Not that this reflects its business, but it impacts net income. They lost a couple cents per share last quarter on fx and still exceeded their estimates.

        Since I began seriously following Skull this summer, I have researched the social trend and interest in this company for more time than I care to admit, which I think is relevant to Skull unlike alot of companies. Its amazing how many people know this brand. Just on FB alone, they have increased followers by !00k in two months.The majority of sentiment is positive which speaks strongly for a company that is so focused on growing the brand.

        I do think EPS will hit an all time low before rallying up over time. No short squeeze will happen, but I think 20 happens next spring.

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