Can Syntax-Brillian Compete With Vizio?

Not too long ago, Syntax-Brillian’s (BRLC) Olevia was the fastest growing television brand in the US, but it was quickly replaced by Vizio televisions made by Vizio Inc., a privately held company based in Irvine, California. Vizio projects sales of over $2 billion this calendar year while Syntax-Brillian projects only $1.1 to $1.3 billion. Vizio's 32" and 37" LCD HDTV's led all models according to Quixel Research's "Best Sellers" for Q'1 2007. Syntax-Brillian’s biggest competitor in the near term is Vizio which targets the same consumers, those that prefer spending less on a LCD flat-panel television then what the name brand charges but still getting a good quality product. In the long term, when prices of established Tier-1 brand televisions such as Sony (SNE), Sharp (SCHAY) and Samsung come down it will prove to be a challenge to lower end Tier-2 brands like Olevia and Vizio, but in the near term Olevia and Vizio are each other’s biggest competitors.

It can be said that Syntax-Brillian and Vizio are so alike yet so different. For starters, both Syntax-Brillian and Vizio Inc. rely on a strategic partnership with a Taiwan contract manufacturer who owns a significant amount of the company’s shares. Syntax-Brillian is partnered with Kolin while Vizio is partnered Amtran. The two use the same strategy of selling televisions around 30% to 50% lower then established name brands. Both also have advertising deals in sports. Syntax-Brillian has an advertising agreement with ESPN while Vizio has a sponsorship with the NBA basketball team, the Los Angeles Clippers and an endorsement deal with NFL MVP, Ladaini an Tomlinson. Vizio is the"Official HDTV of the Los Angeles Clippers" and their sponsorship includes TV and Radio commercials, courtside signage and on-court Vizio TV giveaways as well as images of the Los Angeles Clippers on the boxes of Vizio televisions.

The first major difference that sets the two companies aside is that while Olevia sells mainly LCD televisions for most of its revenue, Vizio produces both LCD and plasma televisions. Both technologies have their advantages and disadvantages and Vizio is targeting a broader audience by producing both kinds of televisions. While both Olevia and Vizio are sold in hundreds online retailers and both are also sold in Circuit City, it seems that Syntax-Brillian is avoiding big box stores such as Wal-Mart, Costco and Sam’s Club while Vizio is thriving in them. The margins are lower at these retailers; however the volume of shoppers and exposure is tremendous. The shoppers at these retailers, those looking for a bargain and are more budget cautious, match the targeted consumers of Vizio and Olevia.

Another difference that set the two companies aside is that while Syntax-Brillian is juggling selling televisions worldwide, Vizio is highly focused in targeting North America. Vizio will have over $2 billion in sales this year to prove it. It doesn’t mean that Vizio isn’t expanding globally as the company is already selling televisions in Australia and other markets but currently they are concentrating in the United States, the most lucrative market for HDTV’s in the near term. By trying to sell their televisions worldwide, Syntax-Brillian had cash flows problems from China which resulted in a secondary offering. The company had to purchase Vivitar to penetrate into the European market which they still haven’t done and at the same the company is risking losing market share in the US.

While both television makers compete on price, Vizio is setting the bar between quality and price like their company motto, “where vision meets value” suggests. Vizio was the first to introduce a high end 47-inch 1080p LCD for under $2,000. Currently it sells at $1,600 while those of name brands cost well over $2,000. Vizio is also one of the first to introduce a 42" HD plasma TV for under $1,000. Vizio is constantly setting the bar for price while providing good quality against major name brands and even though the price Olevia televisions are low, most of their comparable televisions are still slightly higher then Vizio’s.

Another major difference between the two companies is that while Syntax-Brillian is a publicly traded company, Vizio is privately held. Unfortunately for investors, they cannot cash in on Vizio’s torrid growth. While Syntax-Brillian had to rely on a secondary offering to pay down debt and continue operating, Vizio is not only done well but thriving as a private company so it doesn’t appear the company will go public anytime soon.

In the long term with lower prices of LCD televisions, both Syntax-Brillian and Vizio will face pricing pressures from the top brands. For now the biggest competitor to Syntax-Brillian growth is Vizio which is outpacing Syntax-Brillian. Meanwhile it appears some institutional holders have given up on Syntax Brillian. As the institutional holdings filings as of 6/30/2007 flow in, many have already sold their entire position of Syntax-Brillian.

Disclosure: Author has a short position in BRLC

BRLC 1-yr chart

Comments

[RC Martin:]

It appears some institutions have given up, astute observation!!! That could be said for any one of 11,000 issues as every quarter funds move in and out of thousands of issues. Revolutionary development!!!!!!!!

Because Vizio is a private firm does that mean they don't have to put capital into the company or that they just don't reveal their finances? They did or will do $2Billion with no capital input? Wow I'm impressed by the depth of the study. Too bad there is only room for one more eh?

So, if Brilliant Brillian and its collection of clowns and goofs do $1.3BB and make 50¢/sh we should avoid this and hope we could participate in the private Vizio rather than the public Brillian which I might point out is selling at less than 1X sales and will be profitable to the tune of 50¢ or more.

Brillian has more warts than a family of frogs but Sam, c'mon bud, this is just plain giveaway pricing here. Market cap is ½ the annual sales while growth is at 25% +

Shorting this at this level is, well, silly Sammy. Your views are tunnel vision due to the unlimited risk you bear. Cover a little and relax or not.

2007 Aug 16 05:13 PM

[Samuel:]

Are you talking to yourself? First we have this Samuel Sanmina and now we have Sandy Sanmina who is the biggest basher of BRLC on yahoo message boards.

Did you not post this garbage about a month ago?

<blockquote> Of particular interest is the $134MM of Asian sales which occurred during the Sept-Dec qtr and apparently remain largely uncollected. Has anyone ever received an explanation why sales in Asia of $134MM occurred at the same time a similar amount of "PAYABLES" were being booked? Isn't the cost lower than the sale by at least the level of profit margin?

Did Kolin manufacture and ship those Asian sales on behalf of Brillian or did Brillian book those sales on behalf of Kolin? It so hard to untangle the web of players. Where did the Olevia trademark originate? Wasn't that Kolin's brand when they did the deal with Syntax prior to the Syntax Brillian merger?

So much grey area...........but one thing is clear, expecting a FCC pass because you're a new start up is sophomoric mgmt at best. There is no justifiable excuse for costing shareholders $3MM. This outfit seemingly lacks competent mgmt and has a great future behind them. At least that is how this writer sees it. </blockquote>

<blockquote>For the record I am neither a buyer or seller of Syntax-Brillian. I am an interested observer concerned with the irrational exuberance being flaunted on Yahoo and also the baseless BS being bantered by so called "PROFESSIONAL ANALYSTS" with claims like "Greatest Short Squeeze of all time" and price targets with no foundation in reality. Why would a stock supposedly worth $15+ be trading at $4.60 if not for well orchestrated con games.

If readers are upset I would suggest you sue the financial firms that employ those so called analysts or write them demanding they retract the hype and fluff and terminate the BS.

In closing , I will say I have personally researched this outfit and wouldn't buy shares in the firm with your money, but apparently there are more than a couple PROFESSIONAL outfits that would like you to buy into their BS and take some shares.
Hint, when a stock is trading t $7+ and a secondary is declared complete at $5.75 and you the member of the public had no opportunity to participate its usually a signal that you're about to be fleeced by Wall Street Pros,(read, con men).

The aforementioned is the opinion of this writer and should not be taken as advice to buy or sell securities.
<blockquote>

2007 Aug 16 06:00 PM

[RC Martin:]

Well, heck, who wants to pay $7 for the stock when just a little SPIN can get you in, much lower. Just like Sammy and his buddies who attempt a story a month. They cannot make money if the price remains stagnant.

A good story, even some of Sammy's fairytales can give pause and make people react in ways that can be beneficial. Its about keeping the price dynamic so you can buy, sell, sell, buy and just keep movin and shakin and cashin in.

At prices beneath $6 this is a slam dunk for 35% returns.............Bu... remember its just my view and opinion.

Sammy appears to holding ut for something a bit lower, I guess. Good luck

2007 Aug 16 06:12 PM

[Samuel:]

What? You actually think articles posted here will actually move a stock? Please, the people that would actually be swayed by stuff here probably don't own enough shares combined to move the stock more then 1%.

2007 Aug 16 06:20 PM

[RC Martin:]

If articles here are so insignificant why are you with your undies in a bunch?

2007 Aug 16 09:53 PM

[Special Sit...:]

BRLC has a very risky business model with ~50% of sales coming from South China House of Technology, and most of their manufacturing work done by Kolin, which owns a significant stake in BRLC and at times has acted at less than arms length. There was excellent research written on this website regarding BRLC's use of reserves to lower their COGS. BRLC at this time is an excellent short candidate unless their business model is improved and they report their numbers more honestly. The electronics industry is too competitive to have a dishonest management team that is asleep at the wheel.

2007 Aug 17 10:30 PM

[Kevin:]

Hey Samuel how come some of your articles are so coincidently timed with some of the largest drop for BRLC in a month? Like your "The Future Looks Bleak" article on Jun 13, the same day the stock was down as much as over 15%. It also happened to be on the same day as the false Olevia will no longer be in Circuit City rumor.

Now you have this Vizio piece and the stock drops over 15% again on thursday before closing down 10% on no news.

Now I highly doubt your article would persaude more then a couple of clueless investors to sell less then a handful of shares but rather you plan the release of some of your articles with manipulation from your buddies or the hedge funds you work for or maybe whoever paid you to write this. I think you and your cronies plan a selloff hoping to get others legit investors to sell and take out some stop losts along the way to see how low you can get it and then you and your buddies cover some of your short position or pick up some cheap shares.

2007 Aug 18 11:57 PM

[Loren Paz:]

Love your articles Samuel. They are very inciteful. I would love to discuss BRLC with you. I have plenty of other reasons why BRLC will eventually fail and the stock will crash and burn. Please email me [e-mail]

2007 Aug 19 02:25 AM

[DAVEY JONES:]

SAMUEL+SANDY=MORONS
FIGHT ON BRLC!!!
VIZIO TV'S ARE MADE IN MEXICO, AND HAVE "THE WORST IN STORE RETURN AND REFUND RATE OF ANY LCD OR PLASMA TV SOLD IN THE U.S." end quote. C/P

2007 Sep 05 11:37 PM