InfoSonics (NASDAQ:IFON) sells wireless handsets, tablets and accessories under the verykool brand to carriers and distributors.
From distribution to branded products: The benefits of controlling your own destiny
The import tariffs on electronic devices (including wireless handsets) enacted by Argentina in 2009 and 2011 were a blessing in disguise as this was the impetus to exit the lower margin distribution business (primarily Samsung phones) in March 2012 and focus exclusively on its higher margin verykool brand. The recent exit of the weaker private label business further sharpened this focus. As a result, the gross margin almost tripled from 6.6% in 2009 to 18.3% in the LTM.
After the elimination of distribution-related expenses, the cost structure...
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