Yesterday, Syntax Brillian (BRLC) announced a major coup, an impressive alliance with TECO, raising not only 20 million dollars but also securing 100 million in supply-chain financing, representing a total investment from TECO of 120 million dollars. An investment that is equivalent to 20% of BRLC market cap. Yet when the news hit, BRLC share price declined from Wednesday's close of 6.96 to 6.49
Call me old fashioned, but when I see a supplier willing to put such large sums of money on the table just to do business with another company, I recognize that Syntax Brillian must have something pretty special to offer.
This new alliance between Syntax Brillian, Kolin and TECO is perhaps beyond the grasp of the average investor. However we believe that this trifecta alliance will offer immediate resources for the continued growth of the Olevia brand that has not been able to keep up with demand, while at the same time through TECO bring to the market an entire new line of exciting HDTV products and technology, while strengthening BRLC books.
Despite Olevias being sold faster then Syntax Brillian could finance their accounts receivables, iSuppli reports that Syntax Brillian narrowly missed outselling Sony (NYSE:SNE) by 7,180 units last quarter. 2% of yesterday's announced overall investment from SECO would have allowed the Olevia brand to dethrone a Giant like Sony in the North American markets last quarter. Now that BRLC has the full 100% investment from Seco in the form of 20 million in cash and 100 million in the form of supply-chain financing. One needs to pause and wonder what the Bears response will be in three months when Olevia dethrones not only Sony, but perhaps Phillips and Sharp as well.
This long awaited roll out, coupled with the strategic advertising with ESPN, should provide continued brand name recognition while at the same time allow Olevia to continue it's head to head competition against Tier one players. The Bears would love to make Vizio Olevia's true competitor for many reasons. First they championed the giants like Sony and Sharp (SCHAY.PK). Then, when they learned that the business model incorporated by Olevia and Vizio threatened the very champions they saw as saviours, they elected Vizio as the true competitor. While I sincerely applaud Vizio's incredibly market share gain, I like their first champions better. Yugo also made a big splash years ago, but I don't see many driving around today. Quality matters, consumer satisfaction matters, and I think Olevia's Consumer Best Buy ratings speak for themselves. And on the lighter side of the Bears new pick of a Champion, here is a take from MSN (NASDAQ:MSFT).
We continue to believe that the Olevia brand will soon be seen in other major US retail brick and mortar stores such as Best Buy (NYSE:BBY) in the fourth quarter of 2007. With a growing reputation for not only affordable HDTV products, but high quality and consumer satisfaction, Olevia can only continue its torrid growth here and abroad.
So where have all the Bulls gone? We asked that ourselves when the stock traded at 4.50 only to find them entering days later in droves at higher prices. So no doubt they will return yet again at higher prices, but this rough and tumble ride as I warned before is better suited for seasoned Bulls. So if you are looking at an entry in BRLC be moderate, and nibble at the prices you like. Earnings will not be released until September 11th and in our opinion affords you ample time for a well researched, appropriate sized entry in a stock we believe offers immense upside potential.
Disclosure: Author has a long position in BRLC
BRLC 1-yr chart