Arohan

Syntax-Brillian: A Classic Bottom

Great level headed analysis! The doom and gloom around the stock is amazing, and as value investors, this is an opportunity that rarely comes by. We are buyers at this level

I have also written more on Syntax-Brillian at arohanvalue.blogspot.c...

Syntax-Brillian: Time to Hit the Snooze Button

"Thus, for Sony to even break even, they have to have higher margins thatn BRLC."

Steve, I wished I understood what you mean by the statement above. May be you can research the comparative profitability in this industry to get an idea of what everyone's profit margins are

By the way, as for your point 1 above, I was contending that LCoS accounted for a substantial number of BRLC employees, that have been let go. This will reduce SG&A significantly. I guess you do not see it this way. We will just have to wait for the next quarterly report to prove you wrong

Also for a little perspective, 1% of revenues for BRLC amounts to 7 cents eps. So don't be so dismissive. You may have made many assumptions that you think are insignificant but they have profound impact on the final eps number. As such, your eps estimate has a very large margin of error and cannot be used for any basis for investment

Your point number 2 does not clarify or reject what I said and there is nothing for me to add

Good luck
arohanvalue.blogspot.c...

Syntax-Brillian: Time to Hit the Snooze Button

1. Most of the LCoS expense was R&D with LCoS accounting for a substantial number of BRLC employees that were let go. I would not discount it

2. If BRLC would be sold today, the mold for Olevias would be useful to the acquirer an hence the 'tooling deposits' would not be worthless

3. Tier 1s and other lcd manufacturers run at even smaller margins than BRLC. Why do you think they can more afford to pay up for the panels than BRLC? It is also difficult for a buyer (like Sony, for example) to manipulate prices in a supply constrained situation (if you are thinking they will voluntarily pay more to ensure that BRLC is put out of business). Your arguments here do not hold water

Syntax-Brillian: Time to Hit the Snooze Button

Something else that doesn't make sense

This is a company that is selling today for less than net tangible assets, is profitable and based on current price of 2.7, the earnings yield at your estimated eps of 0.17, is 6.3%. So here we have almost a risk free investment, offering an yield of much greater than any risk free instrument you can find in the market, and we are looking at interest rate reductions. Also, your assumptions are very very conservative and excludes many things including the SG&A reduction that I pointed out earlier.

Additionally, the gross margins will improve in 2008 after this temporary blip.

This looks like a no-brainer investment right now

Syntax-Brillian: Time to Hit the Snooze Button

I like your analysis and I will have to check out your model for eps calculations. My one comment would be with half of the sales now outsourced and on royalty model, the SG&A should go down. The reduction you show in SG&A of 15m appears to be the LCoS disposition. Best case, if it is cut in half, than that would add about 0.4 to the EPS. There are a few other things that I think are the wildcards in here

a. Syntax-Brillian's ability to raise prices; migration towards tier 1 designation
b. Sales in Europe and Latin America, specially with Vivitar channel in 2008
c. Any jump in sales due to Olympics in China in 2008, and
d. Reinvestment of SCHOT AR when paid into additional capacity (some of the panel shortage issues can be mitigated if BRLC is able to raise prices and can afford to pay a bit more for panels)

arohanvalue.blogspot.c...

International Competition Between Syntax-Brillian and Vizio Heating Up

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...

Syntax-Brillian Management's Wakeup Call

Excellent article and comments! The management does need to take steps to ensure that the shareholders are protected.

However, it is the among the problems like this that one finds the best investments in the market. BRLC ratios do not do justice to the company's growth. Say what you will of the management (or past management) credibility, the fact remains that the company has executed really well in the face of working capital constraints and in many respects have been the visionary in the industry. If the stock was not so artificially pressured by the short sellers, it were possible that the institutions would be falling over backwards to finance BRLC growth

I myself have written extensively about BRLC on my blog at arohanvalue.blogspot.c.... I consider this to be possibly the most undervalued security on the market

It is strange indeed to talk about undervalued and fast growth in the same sentence but that is what we have here

-Arohan
arohanvalue.blogspot.c...

Syntax-Brillian: Confusing Analyst Statements

Spot on. It is also a bit disappointing to see the financial media propagate that kind of comment without editorializing.

I believe BRLC presents a compelling value for ownership. Please see my articles at arohanvalue.blogspot.c... on BRLC and my rationale on why this may be the best value opportunity in the markets today

-Arohan

Syntax-Brillian Sinks on Disappointing 1Q, Likely To Fall Further

You forgot to mention that Syntax-Brillian is a very fast growing company (>200% over last year, projected 80% growth in the coming year), it is sitting in a sweet spot in US market (mandatory conversion to HDTV coming up), in China (Olympics and general demographics and increasing consumerism) and Latin America. While the commodity market comment is true, BRLC has its supply chain optimized to the level that it is running rings around its competition for profit margins per set sold (think Dell in its early years).

And then, the quality of the lcd tvs they produce is so high that Syntax-Brillian is able to raise prices and is quickly climbing the ranks towards a tier 1 status

For a speculator looking for short term profits, this may be a really bad stock to get into (as you imply). They are a favorite hunting grounds for short sellers. However, if you are a patient investor willing to wait for some time to reap significant profits, now is probably the best time to buy this stock

Please refer to the two articles we have written about BRLC below

arohanvalue.blogspot.c...

arohanvalue.blogspot.c...

The stock is again down today, getting very very close to its book value.

So today you have a stock trading close to book value, growing at 80% a year (future growth), trailing PE of 8, giving a PEG ratio of 0.1 or lower (lower if you use the forward PE)

A rational investor should look at aggressively buying the stock here instead of selling it as you seem to be advising

Sorry to disagree, but generally the secret to investing success is to buy low

-Arohan