Gross margin is a function of both production cost and selling price. Once Smith works through their $32 million taxpayer-financed 50% off sale, they are going to need HUGE battery price reductions if they want to continue to sell anything. You don't think VLNC is going to be able to sell $150 million per year at their current price, do you?
The only reason why sales have temporarily increased is the taxpayer is paying for half the battery.
Noway...eventually prices will come down due to competition...but I doubt it while there is so much left on the subsidy...btw don't you think vlnc has done well with smith US since you used to go on about how they couldn't get the business even though they had the UK biz. Now that Kokam laid an egg and VLNC has the biz at 30% VGM and even you seem to concede the next couple of quarters look good, can't you admit the stock price will rise over the next couple of quarters?
Question: When all the smith insiders bought stock around Oct 1 did you figure they were going for short term insider profits or were overly optimistic about how their business would do after the subsidy runs out?
well today they anounced a 2.7 million operating loss, that would take about 9 million in additional revenue. they expect a million or so in reduction in attorney fees infuture quarters so perhaps as little as 6 million more in revenue could get us to breakeven.
70million X .3 gross profit gives a net profit of 21 million at factory capacity of 150 million. Using best numbers available today.