Steve Smith

Syntax-Brillian: Time to Hit the Snooze Button

1. R&D is currently less than 1% of revenues ... during the last CC, James said that R&D would be headed to 3% of revenues ... which means that whatever savings are realized from the divesting of LCOS will be lost because of an increased R&D budget.

2. You apparently don't understand "net tangible value" and the underlying assumptions. Net tangible value is the value of a company !!not!! as a going concern. Thus, you discount any "intangible value." Your valuing of the molds assumes the company will continue to product product with the molds ... which means you aren't valuing the company for net tangible value ... instead you are valuing the company as a going concern. Unless somebody is going to be making Olevia TVs, then the molds are essentially worthless.

3. I have no idea where you got the crazy idea that Tier-1s have lower margins than BRLC. For example, BRLC buys panels (which are the vast majority of the cost of making a LCD TV) from LG.philips. A 32" LG TV (who presumably also buys panels from LG.philips) sells for $850 at Circuity city, whereas a 32" Olevia TV sells for $550. Are you telling me that Syntax-Brillian has higher margins than LG on this product????

Tier 1 manufacturer, by virtual of being a Tier-1 manufacturer, can demand higher prices/margins. To say that BRLC has higher margins than these companies is to commit a grave error in your analysis.

If you looking at the percentage of SG&A costs, as a percentage of Revenue, you'll see that Sony has higher much higher SG&A costs than BRLC's margins. Thus, for Sony to even break even, they have to have higher margins thatn BRLC.