Syntax-Brillian: Investors Bailing Before Earnings

Ever since announcing their $250 financing from Silver Point Finance on October 30th, Syntax-Brillian Corporation's (BRLC) stock has fallen about 10%. It closed on November 5th at $4.10. It seems some investors are getting out of the stock before the company announces their Q'1 2008 results on Thursday morning, November 8th. Considering how the company has either significantly disappointed investor in the pass earnings calls with poor earnings, guidance, bad news, or a combination of those, you cannot blame them.

The trend from the previous two earnings calls certainly does not favor shareholders. On May 10th, the day the company was scheduled to announce their Q'3 2007 results, the stock price closed at $8.41. After the company announced their results and a secondary offering at the same time, the stock subsequently fell before finding a bottom of $4.56 on June 14th. On September 12th, the day the company rescheduled their Q'4 2007 and year end results after having to delay it one day because of a last minute notice of an accounting error, the stock closed at $6.13. After announcing the results after hours, the stock fell dramatically the next few days before establishing a bottom at $3.58 on September 18th.

Investors already know that this upcoming quarter is bad bearing in mind when Syntax-Brillian slashed guidance during their Q'4 2007 conference call on September 12th, there was only 2 weeks left for Q'1 2008. This leaves little room for an upside surprise. Analysts have already dramatically lowered their earnings estimates for Q'1 of 2008. Just 60 days ago, the consensus estimate was 16 cents per share while currently it is 5 cents per share. What may be more important is guidance for Q'2 of 2008, their October to December quarter. This year-end quarter is the busiest season for LCD televisions. Analysts still have very lofty expectations for this quarter with estimated revenue at $385.89 million which is over twice as much as Q'1 2008.

In the event the company guides below the analyst estimates or surprises investors with any other unexpected bad news, Syntax-Brillian's stock would most likely take another significant hit. The company might be trading at or around its tangible book value, which is approximately $2.67 per share.

Disclosure: none