BRLC Experiencing Growth in North America

The preliminary data released by Syntax-Brillian (BRLC) shows that they are executing on their plan to increase sales in North America. In order to solve cash flow issues due to long payment terms in Asia for accounts receivables, BRLC has moved to a royalty system for sales in Asia. That has allowed BRLC to shift their focus to direct sales in North America while their royalty partners focus on sales in Asia. While this new business model is still in its infancy, it appears as though progress is being made.

In the fourth quarter of 2007, BRLC shipped 252,000 units to North America and sold a total of 642,000 units worldwide from both direct sales and sales through their royalty partners. In the fourth quarter of 2006, BRLC shipped a worldwide total of 352,000 units. Of those sales, approximately 204,000 units were sold in North America. Therefore, BRLC had an approximate increase in unit sales, under their corporate brand name, of 82% worldwide and 24% in North America, compared to the fourth quarter of 2006.

It appears as though the royalty system is allowing BRLC to grow their presence on North America while retaining strong unit sales in Asia under the Olevia brand name. And it should be noted that the shift in emphasis to North America was just beginning in Q4 of 2006. Now that BRLC has expanded its retail presence to retailers like Wal-Mart (WMT), their growth in North America should accelerate and result in gains in market share in 2007.

While I do not believe we are going to see a real recession in the United States any time in the near future, the continued strength of sales in the rest of the world is a also good sign as it will enable BRLC to be somewhat recession proof. Even if growth of TV sales in North America slows, it is widely believed that sales of TVs in emerging markets such as China will continue to grow at a strong pace.

BRLC now has a unique and flexible business model to enable their unique product offering which combines tier one quality and performance with tier two pricing. People shopping for value, in terms of the best performance for the dollar, seem to be turning to Olevia brand name.

What I would like to see is BRLC adjust their marketing to target those people that tend to buy high value and high performance. I happen to be one of those types of consumers. I know Sony is high performance and high quality but I also know they are high cost. I know that Vizio, and some of the other tier two brands, are low cost but they are also low performance and low quality, in my opinion. A brand like Olevia appeals to me because I get performance that is close to or equal to Sony at a price that is close to or equal to Vizio.

A similar phenomenon occurred in the automobile industry in the late 1990s. Subaru was one of the smaller car manufacturers and was struggling at the time. They had lost their vision of being a lower cost but high quality and high performing car manufacturer. They were trying to be Honda (HMC) or Toyota (TM).

When they went back to their roots of providing a rugged all-wheel drive car which could be used in situations that required sport-utility vehicles, they were back on track. Then they started to market to the people that would value such a car. Their advertising was particularly strong on TV stations such as The Weather Channel. They were targeting technogeeks, whether they realized it or not. Technogeeks value performance but they usually reside in an economic bracket which does not have a lot of disposable income. They shop for the best performance and utility for the dollar.

So while sports fans do tend to buy a lot of HDTVs, BRLC should expand their marketing to target other media outlets frequented by those value conscious technogeeks. They could start with The Weather Channel, The History Channel, The Discovery Channel, The Learning Channel, and so on. Many of these are widely available in HD. Get the picture?

Disclosure: Long BRLC

Comments

[Steven L.:]

Hey Larry what price did you buy BRLC at? Why am I somehow getting the feeling you are writing about BRLC hoping the stock price to go up while Samuel is writing about BRLC hoping it will go down.

2008 Feb 20 07:37 PM

[goodboy:]

Good article, based on facts and numbers, not opinions.
82% increase in sales, wow!!

2008 Feb 25 04:34 PM