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Syntax Brillian: The Future Looks Bleak
Posted on Jun 13th, 2007 with stocks: BRLC
Samuel Sanmina submits: Just after Syntax-Brillian Corp. (BRLC) was severely punished by the Federal Communications Commission for âwillful and repeated violationsâ of the ATSC tuner mandate with a fine of $2,899,575 , more bad news hit with Sony (SNE) saying it will soon be selling a line of televisions specifically for Wal-Mart Stores (WMT), Target (TGT) and other discount retailers.
The new line of Sony televisions will directly compete with Syntax-Brillianâs Olevia brand televisions and other lower-end Tier 1 or Tier 2 television brands such as Vizio and Westinghouse. This would be a severe setback for Syntax-Brillian. Syntax-Brillian has already been selling Olevia LCD TVs in discount retailers such as Target, K-Mart and Sears (SHLD). Its main selling point is its low price compared to name brands such as Sony, Sharp (SCHAY.PK) and Samsung. However with Sony offering a budget line of LCD television, Olevia and other low price LCD television makers would start losing their advantage.
Currently in stores, a Sony 32" Bravia S-Series LCD television (KDL-32S3000) is sold for around $1,300 when a Olevia 32" LCD television (532H) can be found for around $700. With a $600 difference, this gives the Olevia television an advantage in attracting customers with a limited budget or those that do not wish to spend a whole lot on a television. Many customers are buying Olevia televisions for the low cost rather then the brand. However, if Sony is able to sell their new line for say around $800 to $900 it will be troublesome for Syntax-Brillian; if shoppers see that the difference between an Olevia and Sony television, sitting side-by-side in a store, is just $100 or $200 then they will be more likely inclined to purchase a popular and reputable brand name like Sony rather then a relatively new and unfamiliar brand like Olevia. Sony plans to supply retailers with the new line within 60 days.
Some questions should also be raised about Syntax-Brillianâs management team. On February 14, the company forgot to report a $2.7 million income tax expense in its second quarter, which they had to later correct, and they are now being fined $3 million by the FCC because of âwillful and repeated violationsâ of the ATSC tuner mandate. The company should have been more than aware of the requirement initiated March 1, 2007 that all televisions sold must incorporate a digital ATSC to prepare for the upcoming switch from analog to digital transmission in February 2009. Why the company decided to "willfully and repeatedly" break the rules is beyond me.
Meanwhile, Syntax-Brillianâs stock price continues to plummet. It closed down 48 cents or 8 percent on June 12 at $5.46 . Even those who bought the 30 million shares during Syntax-Brillianâs secondary offering, at what was a discount then at $5.75, are in the red. Syntax-Brillianâs stock is now 54% off from its 52 week high of $11.70. The stock certainly doesnât look like the short squeeze of the year as many were claiming just about a month ago, with the stock now down about 22% from then.
Syntax Brillian: The Future Looks Bleak
Posted on Jun 13th, 2007 with stocks: BRLC
Samuel Sanmina submits: Just after Syntax-Brillian Corp. (BRLC) was severely punished by the Federal Communications Commission for âwillful and repeated violationsâ of the ATSC tuner mandate with a fine of $2,899,575 , more bad news hit with Sony (SNE) saying it will soon be selling a line of televisions specifically for Wal-Mart Stores (WMT), Target (TGT) and other discount retailers.
The new line of Sony televisions will directly compete with Syntax-Brillianâs Olevia brand televisions and other lower-end Tier 1 or Tier 2 television brands such as Vizio and Westinghouse. This would be a severe setback for Syntax-Brillian. Syntax-Brillian has already been selling Olevia LCD TVs in discount retailers such as Target, K-Mart and Sears (SHLD). Its main selling point is its low price compared to name brands such as Sony, Sharp (SCHAY.PK) and Samsung. However with Sony offering a budget line of LCD television, Olevia and other low price LCD television makers would start losing their advantage.
Currently in stores, a Sony 32" Bravia S-Series LCD television (KDL-32S3000) is sold for around $1,300 when a Olevia 32" LCD television (532H) can be found for around $700. With a $600 difference, this gives the Olevia television an advantage in attracting customers with a limited budget or those that do not wish to spend a whole lot on a television. Many customers are buying Olevia televisions for the low cost rather then the brand. However, if Sony is able to sell their new line for say around $800 to $900 it will be troublesome for Syntax-Brillian; if shoppers see that the difference between an Olevia and Sony television, sitting side-by-side in a store, is just $100 or $200 then they will be more likely inclined to purchase a popular and reputable brand name like Sony rather then a relatively new and unfamiliar brand like Olevia. Sony plans to supply retailers with the new line within 60 days.
Some questions should also be raised about Syntax-Brillianâs management team. On February 14, the company forgot to report a $2.7 million income tax expense in its second quarter, which they had to later correct, and they are now being fined $3 million by the FCC because of âwillful and repeated violationsâ of the ATSC tuner mandate. The company should have been more than aware of the requirement initiated March 1, 2007 that all televisions sold must incorporate a digital ATSC to prepare for the upcoming switch from analog to digital transmission in February 2009. Why the company decided to "willfully and repeatedly" break the rules is beyond me.
Meanwhile, Syntax-Brillianâs stock price continues to plummet. It closed down 48 cents or 8 percent on June 12 at $5.46 . Even those who bought the 30 million shares during Syntax-Brillianâs secondary offering, at what was a discount then at $5.75, are in the red. Syntax-Brillianâs stock is now 54% off from its 52 week high of $11.70. The stock certainly doesnât look like the short squeeze of the year as many were claiming just about a month ago, with the stock now down about 22% from then.