The misreporting of revenue, insider selling, a public stock offering, a 3 million dollar FCC fine and news of competition from Sony and other low cost manufacturers has sent Syntax-Brillian (BRLC) shareholders scurrying from this maker of LCD Hi-def televisions. The stock has dropped over 40% over the past two weeks and is now over 60% off its 52 week high.
There are even rumors that they are pulling product out of Circuit City!
Now the facts: 3rd quarters sales were over $160 million and revenue is up over 250% from the same quarter of last year. The company is expected to post a profit this year, after a loss last year. There are plenty of national retailers out there that are carrying the Olevia brand, including Boscov’s, BJs (NYSE:BJ), Office Depot (NYSE:ODP), Circuit City (NYSE:CC), Kmart (NASDAQ:SHLD), Sears (SHLD) and Target (NYSE:TGT). Many analysts believe that brand awareness is limited, however the fact is Syntax has advertising campaigns with ESPN to attract a male oriented market. The company has also looked to increase sales outside of the U.S. and has alliances in China.
As the deadline for conversion of analog to digital transmission broadcast nears (February 17, 2009), many households with an average of four televisions will be looking for replacements. This should mean growth for a number of manufacturers, including Syntax Brillian. The challenge will be handling increasing costs of LCD glass and the ability to increase production to keep pace with the market.
I purchased the 37” LCD 537H 780p model with ATSC/NTSC tuner and I am very impressed with the quality sound and crystal clear picture. This model has a price range of ($680-$900), which is an incredible bargain. I have since purchased shares of this stock and I am long.
With a share price now under $5 and a PE under 17, this stock should be rebounding in the near term. The holiday season should pay off if management is not hiding any other accounting irregularities, and the hope is that they will provide a long-awaited press release discussing the recent issues and how they plan to show shareholders that the future is crystal clear. If this happens, be ready to back up the truck.
Disclosure: Author has a long position in BRLC
BRLC 1-yr chart