Syntax-Brillian Outlook Below Estimates on New China Strategy

High-definition TV maker Syntax-Brillian (BRLC) said Wednesday its F2008 revenue would not meet analyst estimates due to anticipated changes in its China business model. Shares are down 6% to $3.08 in pre-market trading. Syntax said it now expects F2008 sales of $650-685 million, excluding sales through its Chinese distributor. Had those sales been made by Syntax, they would bring yearly LCD sales to $1.1-1.3 billion. Analysts had been expecting revenue of $877 million. "Under the new business model, we will earn royalties based upon the net sales of Olevia branded LCD TVs in China by our exclusive distributor," CEO James Li said. The distributor is responsible for sourcing components, making, marketing and selling Olevia-brand TVs. FQ2 revenue will be from $155-175 million, vs. analyst forecasts of $303 million, the company said. "Due to the recently announced change in our business model for China, we recognize the need to provide investors with a better understanding of the anticipated effect on net sales and gross margins," Li said (press release).

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