International Competition Between Syntax-Brillian and Vizio Heating Up

Over three months ago, I raised the question previously on whether or not Syntax-Brillian can compete with Vizio, which uses a similar strategy as Syntax. A week later data from iSuppli and then DisplaySearch was released showing that Vizio has become the best selling LCD television in North America during the second quarter. At that time, Sytax-Brillian’s Olevia television was in seventh place for North America.

The latest data available for the third quarter shows that Vizio remains in either the first or second spot in North America while Syntax-Brillian failed to improve their positioning and is not in the top six. On the other hand, tier one brands such as Sharp, Sony and Samsung has reacted to the situation and improved their market share. This comes at the expense of other lower end tier two or tier three brands. Data from DisplaySearch shows that the top five brands had market share of 46.5% in Q2 and improved to 51.7% in Q3. It appears that consolidation is starting to take place in the LCD and flat panel television market.

It seems that Vizio has won the battle in North America handily. Vizio expects to ship over 2.5 million televisions in 2007. Currently the majority of Vizio sales are in the United States. Syntax-Brillian on the other hand is making changes to their business model in China, which would dramatically decrease the number of units they sell. Instead of selling televisions directly, they are now licensing the Olevia name to be used by another manufacturer in televisions and other products. However, even including the units sold by their China-based distributor that carries the Olevia brand name, the company will probably be under 1.5 million units for 2007. Syntax-Brillian expects to sell 1.6 million and 1.8 million LCD TV units after including units sold by their China-based distributor for their fiscal 2008, which runs ends July. As for revenue, Vizio expects over $2 billion for calendar 2007 while Syntax-Brillian would have around $700 million.

It appears that Syntax-Brillian made a huge mistake by focusing almost half their sales in China previously. While margins are higher in China, the 120-day payment terms and overdue receivables from their distributor have caused cash flow problems that plagued the company. Due to those problems, expansion for the company has been severely limited. The company could have enjoyed equal if not greater success then Vizio if they had focused on North America instead. At one time Olevia was better positioned then Vizio and according to DisplaySearch President Ross Young in October 2004, Olevia was the fastest growing LCD TV brand in North America.

It seems that Syntax-Brillian realized their mistake. The company now is licensing off their China business and focusing more on North America. However, it might prove to be too late. A recent report by iSuppli shows that growth for value brands may be slowing in North America due to price reductions by premium brands in the flat-panel TV market along with the premium features they have over lower end brands.

Vizio, which has been enjoying tremendous success in North America, is now planning to expand in Europe and Latin America in 2008. Vizio expects to see over 4 million units of televisions to be shipped globally for 2008. Amtran, which makes most of Vizio’s televisions and is a major shareholder of the company, is planning to raise capital through offering shares and convertible bonds to be able to produce enough televisions in 2008. Currently Syntax-Brillian is already selling its Olevia television in parts of Latin America. Syntax also plans to expand in Europe in 2008 by using the Vivatar brand of digital cameras they own. It looks like the face off between Olevia and Vizio is just starting. While Vizio won easily in North America in 2007, it will be equally interesting to see if they can do the same internationally and take away market share from Olevia and other brands internationally in 2008.

Disclosure: Author is short BRLC.

Comments

[RC Martin]

where can someone buy shares of Vizio? Oh sorry I forgot one cannot.

So what was your point? Your point was much like Rich Smith's article on Motley Fool who spent so much time explaining how Vizio was great. No point. You know Rich? You know Andrew Left?

Its sorta like saying there is no point to look at companies other than Caterpillar since they're the biggest and John Deere is terrible because , well, they're not as big as Caterpillar.

[Samuel]

Actually Sandy you can invest in Vizio indirectly by purchasing Amtran which trades on the Taiwain stock exchange under 2489. Amtran owns around a quarter of Vizio and also makes all their televisions. Our firm currently has owns a long position of Amtran and I suggest you and other investors take a look as well?

Also Sandy, wouldn't it be wise to look at competitors and the landscape of the market it operates in if you are investing in a company?

[RC Martin]

It would be wise yes. However the fact that Vizio is selling more units than Brillian hardly makes Brillian a bad investment as the writer seems to suggest.

Last I checked there was a growing worldwide demand for LCDs, is Vizio the only firm filling the need? Brillian is experiencing double digit growth, the stock is stifled by one man's decision to sell in Asia and that customer hasn't been paying. But to attribute the difficulty to Vizio is ludicrous. Naked short selling to the tune of 17MM shares doesn't help either. That isn't Vizio, that is the SEC issuing a sledge hammer to short sellers. And just to be sure they can hammer without obstruction let's remove the uptick rule as well. Vizio is a non event.

The point of the author is NO POINT at all. If he wants to portray Brillian negatively there are plenty of points that could be made but Vizio is not one of them. Good luck with your Taiwan investment.

[RC Martin]

It would be wise yes. However the fact that Vizio is selling more units than Brillian hardly makes Brillian a bad investment as the writer seems to suggest.

Last I checked there was a growing worldwide demand for LCDs, is Vizio the only firm filling the need? Brillian is experiencing double digit growth, the stock is stifled by one man's decision to sell in Asia and that customer hasn't been paying. But to attribute the difficulty to Vizio is ludicrous. Naked short selling to the tune of 17MM shares doesn't help either. That isn't Vizio, that is the SEC issuing a sledge hammer to short sellers. And just to be sure they can hammer without obstruction let's remove the uptick rule as well. Vizio is a non event.

The point of the author is NO POINT at all. If he wants to portray Brillian negatively there are plenty of points that could be made but Vizio is not one of them. Good luck with your Taiwan investment.

[RC Martin]

Your original response was authored by Edwin now it shows Samuel, how many names do you use to bash with?

[RC Martin]

Samuel,

Hasn't Amtran and Vizio been named in a Funai lawsuit along with Olevia and others?

Seems the markets do reach out to include many The market is very large and its impossible to declare only one a success and all others failures because they achieve a lesser level of success.

Why the veil? If you have issues articulate them. No need to pretend you are the only folks that know. Is it the Schot receivable issue? $92MM dollars sure is a lot of money don't you think? What do you think the odds are of Schot paying the bill?

In my opinion it was absolutely stupid to have extended that credit to them , not once, but even after they had become past due the sales continued. Who was the guy calling the shots(no pun intended) Sollitto? Imagine they promoted him. Now that annoys me and I suspect others too.

Is it the royalty plan? There could be a little better clarity there. I certainly would be interested in knowing the connections. Who are the people behind Far East Olevia? What is the relationship to employees of Kolin and Syntax-Brillian? I would hate to think the shareholders of Syntax-Brillian paid for a plant that'll be used by others and they will get a paltry 3% royalty.

So what disturbs you Samuel? . I cannot buy real shares with vapor money much in the way you can sell vapor shares for real money so I must concede to you the advantage of a lopsided field. However keep in mind if the powers to be ever decide to balance the scales of justice the game might be more evenly contested and you'll have to actually try a little.

[a fool]

Dear Mr. Sanmina, the competition between SB and Vizio is clear. Even if the market condtion are'nt easy SB is still growing and as you wrote the changed their strategy. $ 700 million revenue in calendar 2007 wouldn't be so bad. As I can see at the and of the article, you are still having a short position. When will you cover? Don't you think SB is more then fairly valued with $ 2,6 / share?

[Samuel]

Sandy, whether you want to admit it or not, Vizio is a main competitor to BRLC. They both have the same target market of consumers that wish to spend less for a flat panel televisions then what the major tier one brands charge. Vizio growth comes at a threat to BRLC.

I'll try to put it in very simple terms. A consumer normally only purchases one or two flat panel televisions. If they purchased a Vizio, they are no longer going to buy an Olevia. As the Vizio brand becomes more and more popular more consumers will buy Vizio which means less potential customers for BRLC and their Olevia tvs.

I am not bearish on BRLC simply because of Vizio. Vizio is just one factor and I could probably spend hours listing just the factors that are publicly availible.

A lot of longs believe that the stock price is what they perceive as undervalued currently due to the high short interest. However, a lot of longs aren't seeing why the short interst is so high to begin with. Obviously the other larger hedge funds that are shorted the stock saw problems in the future that would greatly reduce the value of the stock like I did.

fool: I fully disclose that I am short BRLC. I personally have been short since $6-$7. The firm I work for has been shorting the stock also and at higher prices.

I personally have not covered yet since our research shows there still might be some undisclosed problems and potential threats to the company. The company has completely destroyed what little trust they had with Wall Street & Shareholders. Any other negative announcement will have a devastating impact.

I am not advising you or anyone to sell, buy, or short. I will advise you to invest with caution in a stock like BRLC.

[RC Martin]

Sandy, whether you want to admit it or not, Vizio is a main competitor to BRLC. They both have the same target market of consumers that wish to spend less for a flat panel televisions then what the major tier one brands charge. Vizio growth comes at a threat to BRLC.
.................to put it in very simple terms. A consumer normally only purchases one or two flat panel televisions. If they purchased a Vizio, they are no longer going to buy an Olevia. As the Vizio brand becomes more and more popular more consumers will buy Vizio which means less potential customers for BRLC and their Olevia tvs.
.........................

Surely you're not suggesting the other brands have no impact. If not shopping Tier 1,most shoppers shop for the best value they can receive for their dollar. Applying the very logic you use, it would seem detrimental to both Vizio and Brillian along with Emerson, Polaroid, Westinghouse, Toshiba, Magnavox and every other player that a sale by one reduces the potential for others by one. To portray the battle to be between two market players,Vizio and Olevia, runs in direct conflict with your very logic. All players involved have the same and equal opportunity in a free market to target the same audience at any given moment in time.The market will never be controlled by a single player. Thre is room for a number of players.

Will your Vizio investment play out better than a similar investment in Olevia?
Perhaps.

But your article hints of a boys bathroom boast, "look mine's bigger than yours" more than an analysis of facts.

[Samuel]

Yes of course all the other LCD makers is a threat to BRLC and each other. However, as I said in the past, Vizio is simply the biggest threat to BRLC right now:

"Syntax-Brillian’... 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. "

Vizio is the biggest threat simply because they are the largest lower end tier two and tier three tv maker. They have much higher production levels, more distribution channels and higher brand equity then the Westinghouse, Polaroid, Akai, Maxent etc.

They have the greatest capability to steal away at Olevia's potential marketshare in the short term.

Currently the more expensive higher brands such as Sony, Samsung and Sharp targets a different market where consumers have a larger emphasis on quality relative to price. When the prices of those Tier one brands does fall low enough sometime in the future, I am also certain that Vizio, Olevia, and the other lower end brands will lose market share to the big boys. The only exception is they are able to greatly increase brand equity in a short amount of time.

As for the Funai lawsuit, I have looked briefly into it. Although my legal knowledge isn't too great it appears the suit has very little merit to most of the companies involved. I do not think it will affect Olevia & Kolin nor will it affect Vizio & Amtran.

[RC Martin]

Samuel,
Thanks for the response however you failed to address the points. Is it the receivables or the royalty, both, or something entirely different?

Keeping with your theme of a two horse race for market share, are you suggesting if Vizio achieves a larger percentage of market that alone renders them the victor in the game and Olevia is automatically a bad investment because they're #2?

Furthermore, and consistent with your theme, would it make sense, for an individual, individuals or firm or collection of firms interested in seeing Vizio capture a greater share than Olevia, to do whatever possible to create difficulty and obstruction for the Olevia? If each unit of sale is vital to success wouldn't a well coordinated slander attack against Olevia serve the best interest of Vizio?
Wouldn't a relentless naked short attack depressing the stock value and creating difficulty for a two year old firm to raise growth capital benefit Vizio? Wouldn't a closely coordinated effort to obstruct the growth of a fledgling competitor serve not only to enhance your investment in Amtran but add to the value of your short position in Brillian as well?

Samuel, in the interest of full disclosure, have you or your firm engaged in the illegal practice of naked short selling and failing to deliver? While you mention hedge funds saw something early on I submit the short interest in Syntax-Brillian was rising even as they were selling a paltry number of units. Long before the results of last year's December quarter were known the short interest had already ballooned to: 16,383,813 It seems someone had already determined Olevia was a threat before Olevia had even gotten a toe hold in the market.

Are you and your fellow short sellers clairvoyant? Or did the campaign begin to protect Vizio from competition at the moment Olevia began selling?

I concede mistakes have been made by Brillian this year but that hardly explains how the short interest reached what was then almost 40% of the float before they had made a name for themselves. It appears the attack was on long ago and it wasn't due to mistakes or errors when it began.

[RC Martin]

Yes of course all the other LCD makers is a threat to BRLC and each other. However, as I said in the past, Vizio is simply the biggest threat to BRLC right now:
.........................

But all of those others pose NO THREAT to Vizio?

Given the fact you have stated your position with respect to being LONG VIZIO AND SHORT OLEVIA

How would a continuous slander campaign against Olevia effect your position and how would a relentless naked short attack effect your short position in Olevia. Would these event help or hurt your admitted short position?

Similarly, would bad fortune befalling Olevia help or hurt your long position in Vizio?

[Arohan]

Vizio wins in US? How do you know? For all you know Syntax Brillian
may be making more PROFITs in US then Vizio, even if Vizio sells more than Syntax Brillian in US.

Olevia can and has raised prices. Can Vizio do that? Why not? Is it because no one will pay any higher price for a TV like Vizio's that lacks quality in spades

Is your metric just the market share? Or do you also consider profitability and growth in your investment decisions?

Good luck Mr Sanmina in your investment decisions. Hope you lose

-arohanvalue.blogspot.c...

[Mike Whatley]

Your "articles" are beginning to appear more like the Whole Foods CEO posting messages slamming rival Wild Oats Market. One would have to believe you work for Vizio or possibly Amtran. What's a little distortion or poetic license, right?

[Carson Allen]

Samuel, without arguing the merits of BRLC, your responses to comments on this article reveal important facts that you have not previously disclosed.

Your responses to these comments reveal that you work for a firm (I assume a hedge fund) that has a short position in BRLC. The firm you work for also has a long position in Amtran, a major shareholder and manufacturer for Visio. As your article points out Visio is a major competitor to BRLC.

Several questions:
1. Will you disclose the name of your employer?
2. Is your employer aware of articles you've posted on Seeking Alpha?
3. Does your employer review or in any sense approve these articles in advance?

We all realize that authors who post articles on Seeking Alpha have a specific point of view, which is as it should be. Readers may not be fully aware, however, that content is subject to the same hidden agendas as many message boards.

I would suggest you provide full, clear disclosure. Thanks you.

[RC Martin]

You're kidding right? Samuel takes time to post numerous articles and rebuttals but interestingly for a professional (as he purports to be)he feels the need to hide behind a pseudonym.

If he were above board and not attempting to conceal anything why doesn't he just type his true identity? Why the need for an obvious bogus name.

As another wrote, he had a response on here already under a true identity and quickly changed it. What scared him so? Has he answered any questions posed to him?

[Loren Paz]

It seems you Sandy Sanmina have changed your ID to RC Martin just now too? Why is it your previous username is so similar to the author of this blog piece and now you decided to change it all of a sudden?

Something seems fishy. It would be funny if the two of you are the same person staging a conversation with yourself.

[RC Martin]

LoranPaz ,

Why Samuel elected to post under that ID is something you'll have to ask him. I would be curious to know as well.After all he could have been any name he wanted , apparently he wanted to be Samuel Sanmina for a reason.

I'm sure it had nothing to do with him seeking to piggyback on my efforts to point out flaws in the firm on Yahoo message boards.

As for he and I being one in the same, I resent the inference. My morals are far different than his I suspect. I do not short stocks. If I don't like what I see I choose another. I derive no personal satisfaction from being destructive.

[RC Martin]

Samuel,

I was familiarizing myself with the Seeking Alpha web-site when I discovered the area called "Our Contributors" and read the terms for becoming either Silver or Gold Certified. Are you familiar with that area?

I noticed your pseudonym Samuel Sanmina was conspicuously absent. What prevents you from submitting for Gold or Silver status?
The terms seem rather straight forward and designed around providing healthy honest exchange of thoughts and ideas. I would have thought someone like yourself who has been a frequent contributor would want to be acknowledged and awarded at least Silver status.

I must apologize as I have forgotten to disclose my position in BRLC, I hold a very modest long position which holds my interest. I have not bought anything I haven't paid for.

How about you and your short position, have you or your FIRM sold anything you haven't delivered to the buyer?

[RC Martin]

Samuel,
You said earlier, "I personally have not covered yet since our research shows there still might be some undisclosed problems and potential threats to the company."

Well you can mark the closing of CompUSA off the list. Who would have guessed all CompUSA's inventory has been PAID IN ADVANCE.

Seems an additional 1.2MM shares were sold short just in time for the announcement as well but who would have guessed Kolin would elect to go on a buying binge simultaneous to the selling. Seems this one was a dud Samuel. Kolin in uncany fashion was right there , Johnny on the spot , so to speak.

Its as though Syntax suddenly has an inside track to the short sellers activity. Could it be a market maker sharing info with them? A mole somewhere in the short community? Let's face it Samuel, could it be fortuitous luck that Kolin was right there to buy? Could it be clairvoyance that Syntax had insisted on UP FRONT PAYMENTS.

What is your research telling you? What has your research revealed about the name change Samuel? They did mention Olevia Group International but there seems to be a delay for some reason. Any idea what that delay is related to Samuel?

[RC Martin]

Samuel,
This is from your bio:

"Samuel uses a pseudonym because the fund he works for is adamant about not disclosing any of their stock positions and it would be possible for him to be traced back to the fund if he gave his full name. His true identity is known to Seeking Alpha."

What kind of PROFESSIONAL firm seeks to conceal their identity unless they're engaged in dishonest activity?

At 2:10pm on December 4th you wrote:
"Our firm currently has owns a long position of Amtran and I suggest you and other investors take a look as well?"

Now it cannot be both ways, you state the firm doesn't want to reveal positions and then you go on to state their position and further recommend others follow suit.

Samuel, I submit, honest professionals don't hide behind pseudonyms. Honest people have nothing to hide from.

That's my opinion, I think you and your firm are a criminal element seeking to manipulate . And that is my real identity, I have nothing to hide from I am an honest man.

[RC Martin]

Samuel- Are you a dishonest person?

Your bio says "Samuel uses a pseudonym because the fund he works for is adamant about not disclosing any of their stock positions and it would be possible for him to be traced back to the fund if he gave his full name. His true identity is known to Seeking Alpha."

but your post of Dec 5th states the following:

"fool: I fully disclose that I am short BRLC. I personally have been short since $6-$7. The firm I work for has been shorting the stock also and at higher prices."

I'm sensing a conflict in your statements Samuel. You are an honest man right? You're here for above board reasons right? You or your "firm" wouldn't be engaged in criminal activity would you?

You've gone from, I can't reveal positions, to, I and my firm are shorting, all in a few posts.

So which is the truth and which is intended to be misleading, kinda fraudulent?

[Tony Balokey]

You did not mention how prices are coming down so fast for brands name TVs that no name drecks like Olevia might be short lived.

Currently you can already buy a Philips 47" 1080p LCD HDTV for $1030, and a Sharp Aquos 46-inch 1080p LCD HDTV for $1,400, a 47-inch VIZIO Gallevia 1080P for $1400 and the top of the line Sony Bravia 46" 1080p for $2,000. All the prices has to do is fall a little more and no name drecks like Olevia is done.

[RC Martin]

Samuel,

You've been a busy man lately, what with changing the Bio and switching pseudonyms from Edwin to Samuel and now Sandy Sanmina. You must be growing tired.

What sort of PROFESSIONAL hides behind a veil of secrecy changing his ID every several days?
"Samuel Sanmina (an alias) is currently working as an analyst for a hedge fund, specializing in consumer electronics and related stocks in the US. He also has knowledge of the consumer electronics industry in China and other Asian regions."

What happened to this part of the BIO? ""Samuel uses a pseudonym because the fund he works for is adamant about not disclosing any of their stock positions and it would be possible for him to be traced back to the fund if he gave his full name. His true identity is known to Seeking Alpha."

Are you suggesting Mr Jackson is complicit in your effort to deceive?

David Jackson assures me the repeated name changes are not something he or his staff are a party to. Could it be a security breech on this web site? Or a dishonest man attempting to use this venue to facilitate a deceit and fraud?

Why the urgency to keep altering yourself? Honest men don't hide and honest men don't need to change identity three times. Why not just be Edwin and keep it at that Edwin?

Looks silly when you change your ID to Sandy Sanmina and address your messages to Sandy. Professional people don't play deceitful games Edwin. So what is your true agenda? Why do you come to this website, to foster deceit?

I think David Jackson prefers HONEST PEOPLE, try HONESTY FOR A CHANGE.