Syntax-Brillian Losing North American Market Share

Recent data released from iSuppli would suggest that Syntax-Brillian’s (BRLC) Olevia LCD televisions are losing market share in North America. Back during the second quarter of 2007, data from iSuppli showed Syntax-Brillian was ranked seventh in North America with approximately 256,197 units shipped. A total of 4,193,635 units of LCD televisions were shipped during the second quarter, which gave Syntax-Brillian a market share of 6.1%.

The newest data shows that Syntax-Brillian is no longer in the top seven for the fourth quarter of 2007. Total units of LCD TVs shipped in North America during the fourth quarter were approximately 7.9 million units. That is about a 47% increase from the 4.2 million units during the second quarter. However, Syntax-Brillian released on Monday, February 11 that the company only shipped around 252,000 units in North America during the fourth quarter of calendar 2007. This is about a 1.6% decline from the second quarter. The 252,000 units shipped would give Syntax-Brillian a market share of only 3.2% in North America during the fourth quarter. Philips, which currently holds the seventh spot for the fourth quarter, had market share of 6.7%. Therefore, it would appear that Syntax-Brillian had dropped at least a few spots from seventh.

Furthermore, tier-one brands such as Samsung and Sony (SNE) have acted aggressively to capture market share back from Vizio and other tier-two and tier-three brands such as Syntax-Brillian’s Olevia, Westinghouse and others. Back during the second quarter, Vizio surprised many individuals when they became the best selling LCD television brand. During the last two quarters, Samsung and Sony have stepped up their efforts through price cuts and increased marketing to recapture market share in North America. iSuppli data shows that Samsung’s market share increased from 11.4% in the second quarter to 14.2% in the fourth. Sony increased from 6.3% to 12.5%.

An advantage that the tier-one brands have over lower end brands is that have more room for price reductions then lower end brands such as Vizio and Olevia that sells at lower margins. As the price difference compresses between name brands and lower end brands, more consumers would go with the name brand televisions instead. Riddhi Patel, the principal analyst of television systems for iSuppli, stated:

While Vizio’s pricing was still lower than Samsung’s and Sony’s in the fourth quarter, the differential was not great enough to lure as many North American consumers away from the established brands. Consumers in the television industry are not as brand conscious as they once were, as evidenced by the popularity of Vizio. However, when the difference in pricing between a value-brand television and a premium-brand set is within the 10 percent range, consumers often will go for the premium brand.

Disclosure: Author has a short position in BRLC

Comments

[Jose]

still amazes me seeknig alpha lets this biased comments be published about any company helping the illegal short scheme in line with the hedge funds. Also the information is not compeltelly out yet but still conclusions and even market share is being discussed as pretty much final numbers. About Sammina everyone knows he is crap as he has shown all over the yahoo board

[Carson Allen]

Samuel, I am glad to see your bio has been changed to disclose that you are employed as an analyst for a hedge fund and, as you've done in the past, you've disclosed that you have a short position in BRLC.

There still remain questions that should be answered:

1. Your responses to comments on your 12/4/07 article on BRLC revealed that the hedge fund your work for is also short BRLC. Is this still the case?

2. The firm you work for also had a long position in Amtran, a major shareholder and manufacturer for Visio, a major competitor to BRLC. Is this still the case?

3. Will you disclose the name of your employer?

4. Is your employer aware of articles you've posted on Seeking Alpha?

5. 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.

Those that read your posts should realize that you are not only biased by your own position in BRLC but it may, in fact, be part of your job to write negative articles about BRLC.

Please take the time to provide more complete disclosure, so the content of your article can be judged fairly.

[Ben Around]

I thought they were selling everything they make. If this is still true then the market is expanding faster than BRLC's mfg capabilities. But that is not a bad thing, just look ar GM,Ford who kept growing the mfg base in a growing market till the market changed and now they must shrink.

I am highly suspect of info from this writer. Hedge fund that is short?

[User 152348]

Hi, I see that you are working hard.
2 Negative article based on 1 press release within 4 business days.
Are shorts really that desperate?

[Steven L.]

All the aricles written here about BRLC on Seeking Alpha are useless. They are either a bias bash job by Samuel Sanmina or a bias pump job by Larry Lazer.

[retrobeast]

BRLC is alive and well a buyout or merger is in the works as you read this. Ignore stupid articles by shorts.
See you all at $6 by end of summer.

[Steven L.]

And you know a buyout is in the works how? If you really did know then you wouldn't be posting that info publicly on an internet blog.

And care to explain how you arrived at a $6 price by summer? Although, any price target on BRLC is useless like the how the professional analysts had $15 and $12 on the stock early last year when the stock was around $6. Those $15 and $12 were lowered all the way to $4 and $2.70 now.

Although I wouldn't mind $2.70 right now. I bought BRLC at $2.50 thinking they isn't much downside left. Boy was I wrong.

[P. Vemireddy]

The math is off. Comparing 4Q unit sales of 7.9 million to 2Q 4.2 million, is an increase of 88%, not 47%.

If overall unit growth is 88%, any company not increasing their unit sales by 88%+, will be losing market share. That doesn't necessarily mean business is bad. The real problem is the concept of unit sales as a yardstick. It treats a 65" LCD and same as a 32". Since the 65" could easily cost 6x as much, the real yardstick should be revenue market share.

Of course, the author of this article isn't interested in legitimate analysis. The number of useless articles on Seeking Alpha seems to be multiplying exponentially.

[Loren Paz]

Seeing how the company's brand sell at a lower price then the major name brand competitors, revenue might not be an extremely accurate measure either when you have $1700 42" Sony Bravia XBR's and $800 42" Olevias .

No one is certain about the product mix for BRLC except the company itself. However, ASP was around $550 last quarter. I don't expect it to dramatically increase to something like $1,000 for their fiscal second quarter. Most of the retailers selling Olevias like K-Mart, Target, Sears, Circuit City don't carry units larger then 42" in their stores.

The loss leader used by Target and maybe K-Mart on black firday was a 37" Oleiva I believe. Those 65" tvs were availible in small quantities at Costco's and Sam Clubs. I don't think 65" TVs accounted for a large portion of their product mix. A 65" TV isn't the preffered size yet since they cost around $3,500-$4,000. This holiday season 42"/50" seemed to be more popular. And at lower end stores like K-Mart / Target / Wal-Mart 37" seemed a little more prevelent.

[Frank_Zapinski]

I am one of the Manufacturer's Representatives for SBC, and I can tell you that the company does sell every TV they manufacture. My personal frustration is that I cannot supply my customers with quantity that meets their demand. This shortage was caused by a shortage of LCD panels in the third and fourth quarter, and continues today. The sizes most impacted by these shortages are the 26", and those that are/were are 32" and 37", the three sizes that drive the unit volume in the category.

SBC's $250 Million loan/investment capital that they received came on October 31, well after buying decisions for the 4th quarter had been made. Additionally, panels are allocated by panel manufacturers (there are four major suppliers of Grade A LCD panels, Samsung; LPL-Philips, Sharp and CMO), and in the case of shortages, it is difficult to build market share when you are competing against your suppliers (who also sell TV's,)... Samsung and Sony are in Partnership with their LCD manufacturing plant.

SBC/Olevia has invested in a domestic assembly/manufacturing facility in the USA. Presently the 37" and 42" sizes are being manufactured at this facility. Soon all sizes +37" will be assembled/manufactured in this facility. This is important because this facility allows for significant reduction in freight costs, duty and import taxes.

Also, compare the features of like Olevia products to those manufactured by Vizio, and you will see that Olevia is in most cases significantly better featured, thus offering a much better value for the consumer.

As the economy continues to slow, manufacturers like SBC/Olevia and Vizio will continue to thrive, more panels will become available because consumers will drop from the Tier l brands to the Tier ll brands. Olevia will take some share from Vizio and Westinghouse. Olevia, like Vizio is strategically promoted to sports fans, and viewers of highly targeted cable TV shows.

Sure there is cause to worry. There are lots of factors that could have a negative impact on SBC, yet on the other hand, there are also significant opportunities as this brand is NOT yet in distribution with Wal-Mart/Sam's Club, Best Buy or Costco. If Wal-Mart for example decided to support the brand, it is possible that the company's annual sales could/would double.

I suppose the best advice is to look at this company from all-angles and consider they have an emerging brand name in a market that likely will be driven by Tier ll suppliers because of the economy slowing.

[beyondtheverge]

Frank,
are you aware of the current situation with the creditors?
If they sell everything they make, how come they couldn't pay $20 mln to the creditors?

[Samuel]

I have nothing against their products. I personally would not buy most of them except the 7 serieis but they fit the need for budget minded consumers. I have my doubts about the Vizios, Olevias, Westinghouses, and Polaroids all staying viable as prices drop further and further and the difference between the name brands and value brands compresses. I pesonally do not believe tier-twos and tier-threes can stay as competive with the tier-ones in the long run. As for moving up, it would take some drastic marketing to become an established tier-one brand in the consumer electronics industry today.

The main problem now is thier business model and the execution of their management. At times it seems that the company is definitely not making decisions in the best interest for the majority of the shareholders. Instead of building trust and confidence on Wall Street, they destroying what little credit they have left.

The current problem with their creditors could have been avoided. It is somewhat astonishing for the company to obtain more and more financing and yet appear to be worse and worse.

I cannot say the current conditions weren't entirely expected. I have been crtical of the Silver Point loan back in November: seekingalpha.com/artic...

Although the outcome was more serious then orginally anticapated.