Syntax-Brillian and Other TV Sales Hurting in Weak U.S. Economy

A recent report from Digitimes suggests that sales for Syntax-Brillian's (BRLC) Olevia televisions may be hurt by the weak US economy during the second quarter of calendar 2008. The report stated that both Kolin and Teco Electronic & Machinery, who are in a three-way alliance with Syntax-Brillian to manufacture Olevia televisions, reported that they would not receive as many LCD TV OEM orders as expected in the second quarter. Kolin has trimmed their outlook from 350,000 units to 230,000 units while Teco was stated having trouble meeting their goal of 600,000-700,000 units.

Kolin has been Syntax-Brillian's long-standing main contract manufacturer while Teco entered into the strategic partnership back in September 3, 2007. Teco originally invested $20 million into Syntax-Brillian for at 3,083,945 shares of common stock priced at $6.4852 per share. With Syntax-Brillian trading around $1 per share currently, their investment is now worth almost 85% less.

In addition, Royal Philips Electronics, makers of the Philips televisions, recently announced they stop manufacturing TVs for the US and Canada. Instead, they are licensing their LCD television business in those regions to Funai (FUAIY.PK). Funai currently already manufactures televisions sold under the brands Emerson, Sylvania, Symphonic, and makes some of the Insignia LCD TVs sold in Best Buy (BBY). A main reason for the move by Philips was that rapidly falling LCD prices have been hurting profit margins. Philips had market share of around 6% in North America in 2007. However, while the brand is well known, it is not perceived by consumers in the US as being as high quality as Sony (SNE) or Samsung. Therefore, Philips LCD televisions are priced lower then comparable models made by Sony and Samsung in the US.

Furthermore, since the second quarter is traditionally slower for TV sales, many companies are slashing prices to stimulate demand. Sony and Samsung have started reducing prices. Vizio, the leading value brand in the US, has reduced the prices for their 32" LCD televisions to under $600.

Meanwhile, Syntax-Brillian has taken steps to restructure the company with the departure of CFO, Jack Hodgson, a manufacturing agreement with Compal Electronics, and naming Greg Rayburn of FTI Palladium Partners as interim COO. However, the company has yet to provide investors with an update regarding their financials and loan after announcing around two months ago that they were delaying earnings and that were in default on 19 covenants of their loan arranged by Silver Point.

Disclosure: Author is short BRLC.

Comments

[wyzgy:]

i can't believe you let this hack contribute as often as you do-especially with his biassed/short position as stated. he cannot report honestly on this company and to try to do so is a HUGE conflict of interest. tell me, you are short on a stock, then write a hack-job article. what is the purpose of that article?? to ENHANCE his position?? thats like having my dad call balls and strikes for me when i'm pitching. what a steaming pile of rotten waste. why won't he use his real name?? absolutely NO credibility here and for alpha do even allow him a venue is disgusting!!

2008 Apr 20 01:44 AM

[silvy:]

Agreed. What a joke. Has only his self interests in mind. You might be surprized in knowing that the future of this company is not as bad as you think it is!

2008 Apr 20 05:18 AM

[bill9300:]

the article seemed honest to me.

2008 Apr 20 08:01 AM

[beyondtheverge:]

I just don't get it what is the purpose of this site? To let anyone with an agenda to bash or pump stocks? But that is OK. What I really don't understand is how this garbige is diplayed as news on Yahoo.
And there is a pattern here. Each time the company announces some encouraging news the shorts are rushing to post the compilation of all the negatives from the past.

2008 Apr 20 12:21 PM

[300mph:]

Samuel, a word of advice. Get a life.

2008 Apr 20 04:33 PM

[Larry Lazer:]

It makes you wonder, doesn't it? The guy has been short for ages. If true, he has made a huge profit. And, yet, he remains short even though this stock dropped to the 0.70 level. Why? Presumably, he believes, or believed, that the company was going bankrupt. Either that or he is playing the volatility and shorting every time it goes up.

I would think, if he knew it were going bankrupt soon, that he wouldn't feel compelled to bash the company with more negative articles. As such, he is either playing the volatility and trying create a bash and dump scenario for his shorts or he know realizes BRLC isn't going bankrupt and is trying to bash the company while he slowly escapes his short position.

It is becoming clear that this company is not going bankrupt. A CEO that has purchased as many shares as Li has would not also reduce his salary to a dollar unless he was pretty sure the stock price would recover. If he didn't think the company's stock would recover, he would just leave and cut his losses rather than stay and work for a buck.

Other CEOs have made similar statements by reducing their salary to a buck. Can you say Steve Jobs?

2008 Apr 20 08:47 PM

[beyondtheverge:]

Larry, I think the same. If he was sure the company is going BK there wouldn't be any need to bash the stock. So why would anyone post all the negatives 24/7 on Yahoo board and here? The guy stated that he works for a hedge fund that is short. So the only explanation I see is that his fund is short millions of shares and they are covering. So they need shares to buy and hope those shares would come from people scared by his writing.

2008 Apr 20 10:02 PM

[obkozranch@...:]

BRLC is not going bankrupt. Now is the time to add. Next year is our year, and Sam Sanmina seems like he got hurt on Sanmina stock and likes to bash Syntax now. Pay no attention to the fool behind the article.
BRLC already got the financing, and will have no bearing on the covenants so protected by outside auditors from silverlake. I am long and adding here.
kenn

2008 Apr 21 12:23 PM

[awer:]

Only stupid will short at this price. the author is one of them.
HDTV is the trend, star for the future. buy this, it will easily give you back 5 times price within 2 years.

2008 Apr 21 06:05 PM

[awer:]

Barron Robert W. Baird looks like has more clout than you.
To be a good analyst, Sam need to be more analytical skill, cannot based on your position to put random shot article. you are killing yourself.

2008 Apr 22 04:21 PM

[awer:]

Sam, take a look:
www.marketwatch.com/ne...

2008 Apr 24 05:27 PM