I'm always hesitant about companies with such little history, but for a young company they seem off to a good start. Definitely good valuation and leverage risk (decent P/E and D/E ratios) right now. Also good RIO. It's a little concerning that their EPS recently dipped and the projected estimates I could dig up aren't great for the next four quarters. I'd also like to see a bit more shareholder friendliness (like buying back shares or issuing a dividend, etc). But I'm overly conservative when it comes to long term value investing. This is definitely a company I'll keep my eye on. Thanks!

yeah sorry i meant accounts receivable. And I wondered if bankruptcy of HMV had anything to do with other vendors not taking orders, because their revenue in Q1 2013 is down so much compared to Q1 2012. They went from a profit of 1 million to a loss of 7 million (with t heir cost of revenue also up). It cant all be the loss of HMV? Why are other vendors also buying less skullcandy gear?

And regarding brand quality, there are already various other eyecandy headphones endorsed by famous people. With very similar or better audio quality at that price range. I agree that they look nice, but since its so competative, who says other brands wont be able to do something similar? I kind of fail to see how they set themselves appart from the rest of the (pretty competative) market. Besides some nice colors.

They are also very slowly growing in europe.

But i supose like you said there is very little downside at this point.

edit: i supose tho what the dre beats did for the urban and rb types, skullcandy is now doing for the more alternative types? They seem to offer them for cheaper and relative better sound quality compared to the beats. As skaters and surfers tend to care a bit less about the luxury aspect.

Their revenue in Q1 2013 is down so much versus Q1 2012 for a few reasons:

1. Their initial repackaging strategy was implemented in Q1 2012 and actually had a positive impact for the quarter...after the initial spike the new packaging proved to be less effective than the original packaging, hence the packaging reset that should be fully implemented by Q1 2014

2. They had significantly higher sell-through in Q4 2011, meaning they had much lower inventory in Q1 2012, which in turn means more full price sales and much less discounting/off-price retailer selling which would reduce gross margins

3. They had higher inventory going into Q1 2013 (after the aforementioned repackaging was unsuccessful aside from Q1 2012) which meant more discounting at retail level to improve sell-through in Q1 2013 which led to lower gross margins


4. They had severance pay and bad debt expense from HMV and a few other non-recurring expenses in Q1 2013

5. They actively decided to stop selling at off-price retailers in Q1 2013. Off-price retailers represented 10% of sales in 2012 and they are looking to make this 0% of their sales due to the adverse impact they have on Skullcandy's margins and brand equity. In Q1 2013, they reduced their off-price sales by 66.6% on purpose.

The turnaround, if successful, should fix these issues as I outlined before. Again, the company is becoming customer obsessed (improved products) and is now better leveraging packaging and spokespeople (to improve sell-through). Lower sell-through leads to lower sell-in, which leads to overall lower sales to retail customers. It is all about the point-of-sale and packaging on the retail level to drive sales, and the company now realizes that and is positioning itself to be more effective at it.

Regarding differentiation, they believe they do the best job at capturing youth culture (sports, music, etc.) and appealing to this demographic. This is reflected in the stores they sell their products in (aside from the mainstream retailers, they have a "core" set of retailers such as Zumiez and other skate/snowboard/etc. shops) and the way they position themselves inside the retailers as a brand/product.

you probably mentioned it, but their gaming products are getting really good reviews. They probably almost alone justify buying. Im sold on this . Im still curious why they are so slow at adopting it in europe. Is europe that tough a market to conquer with all the different supply networks, stores, languages and cultural differences?

Can you talk a little bit about the industry itself. These high end headphones really took of out of nowhere. Now I'm seeing $200-$500 Dr. Dres everywhere is this really sustainable I'd be worried this is just a fad that's going to die soon.

Hi everyone, had fun reading through this thread. Not as much fun as reading the thread on FNMA, but still entertaining and certainly more instructive.

Despite a strong run up recently, I would like to discuss the name IDT as a compelling value play and get your thoughts.

IDT Corp (IDT) is an entrepreneurial technology and telecommunications holding company run by its founder Howard Jonas, who returned to IDT in 2009. IDT’s core business is based around retail prepaid phone cards as well as selling access to its network on a wholesale basis. IDT owns quite a few other assets, which include Fabrix (cloud based video storage -->think DVR), Zedge (~#12 most popular android app, download ringtones and wallpapers, 50 million users), a portfolio of 38ghz high-bandwidth spectrum licences, VOIP patents, and real estate. IDT provides a cheap call option on these opportunities, while the significant cash on hand and FCF provided by the telecom business provides downside protection.

Using a sum of the part analysis:

IDT has roughly $160 mln in cash, representing 7$ cash per share.

It's core business of telecom and calling cards should generate roughly $44mln in EBITDA and $32mln in FCF in 2013. At very modest valuations of 7x FCF and 5x EBITDA, I value telecom business at roughly $220mln.

Fabrix: With a little over $5mln in revenue through the first half of 2013, and revenue growing at 25%+, this division is getting a lot of interest from big players such as IBM and Dell. 8 of the top 10 cable companies in the US are testing this technology in their labs, it has the potential to become a much larger revenue producer, or potentially be acquired. I think a very conservative valuation for this would be 3x year-run revenue, or $30mln.

Zedge: zedge has been growing its revenue roughly 20% for the past 5 quarters. It is on track to have revenue of only $6.5mln for this year, however it is profitable and scalable. Valuing it at only 3x revenue gives a value for the 81% owned by IDT of roughly $16mln. This could be worth significantly more however, as 3 years ago someone bought a 1% stake at a valuation of $30mln, and since then revenue and users have more than doubled. Also as food for thought, snapchat just recently underwent a funding round with a valuation of $860mln; it is #12 on google app store, zedge is #13.

ICTI: This consists of a bunch of VOIP patents. This division was spun off in 2000 to at&t for $1.1bln(!) and then reacquired 6 years later for only $28mln. It has recently went through a trial run in virginia pursuing some relatively small companies about patent infringement, in which all 3 companies settled. However the big boys, such as Cisco, IBM, Apple, HP, Nortel are all potential targets. A law firm has agreed to pursue the case on an entirely contingent basis, which I think speaks well for the chance of monetizing on this, as well as the fact that management is considering spinning this off as it's own company, which means they assume it could be big. I will give it a value of $15mln, and I think it could be significantly higher. (would be interested if anyone knew a lot about VOIP technology and what the dollar amount of the market might be...no idea about that)

IDT Spectrum: They own 633 38-GHz licenses and 16 28-GHz LMDS licenses. I don't know much about this, but they sold 8 of their licences for $6.8mln last year. Assuming those were the cream of the crop, I conservatively value the remaining portfolio at $30mln (they had an offer of $30mln for it which they refused).

Real estate: IDT owns a large building in NJ. It is valued at roughly $70mln, and has a $23mln mortgage remaining on it, giving equity of roughly $47mln.

So to total it up:
$160 mln cash
$220 mln telecom
$30 mln fabrix
$16 mln zedge
$15 mln ICTI
$30 mln spectrum
$47 mln real estate

$518 mln estimated valuation

As of today IDT had market cap of $452mln, so I see minimum upside of 15%, and a very compelling risk reward, with a lot of different ways for this situation to improve dramatically on that upside. I think the downside protection is also very solid, as even just cash and telecom is worth $380mln.

Thanks

when was that building acquired? Could easily be double that 70 mill if it was more then 10 years ago. Since they note down the original purchase price.

And they sold or spun off the VOIP patent thing? If they sold it , how the hell did they sell it for over a billion and get it back for 28 million? Would like to know the story there hehe.

I dont think you can put in the amount of cash just like that tho. They have 160mm in accrued expenses alone. 40 mill in accounts payable, and some long term debt as well that you gotta discount. some long term debt etc.

You could have just typed in "pump and dump" and saved yourself some effort. Reading the 10q is quite amusing if you are a quick reader.

You might find this article interesting (I wrote it)

http://seekingalpha.com/instablog/13...ll-the-company

So eventually a well groomed growth stock will reach a point of market share where they are limited based on the worldwide market demand. The saturation point where the business of increasing sales becomes more and more difficult. This is, in reality, obvious. I, of course, am not stating this single theory or idea will be cause for exit of a position but merely coupling this idea with questions for my own selfish purposes. Obv.

I have owned SAM for long enough be weary of this saturation point coming sooner than later. Clearly SAM could grow the brand for years to come imo.

Is this the best company like it to own? (obv. I know what competition's P/E is, etc.)

Does SAM still peak the interest of institutional value investors if 90%+ is institutionally owned now?

I guess I don't want to sell for the same reasons it is a widely held, quality growth stock.

IF you are worried, sell enough to make yourself not care if it does what it does in terms of price. Congratulations on not panic selling it during the wild ride it has been taking recently.

1) Yes it's extremely undervalued. I'm not going to post my valuation because it would be time consuming to write it up... And I don't like you guys that much.

2) It has significant upside potential with multiple clear and obvious catalysts.

3) It has a reasonable balance sheet that protects investors at the current price from at least part of their downside should the entire thing go sideways. (always possible)

The true value of a company are not the net assets (IDT has $342 million in liabilities too) but the present value of all future dividends imho. IDT has a lot of revenues but variable small profit. If they can earn 10% profit, that would be $150 million on $1.5 billion in sales. That would be $7 per share. However, some years they earn $50 million and some years they lose $150 million. It probably has some value, but there might be more stable stocks out there. There are many stocks with negative assets that are really valuable becasue they throw off a lot of cash and have little risk of missing a bond payment.

Always worried, never scared. Order in to sell part Monday.

I have read them.....can you be a little more specific?

I am not very familiar with the SKUL brand. Aren't these stylish headphones susceptible to being a fashion fad?

Just a few of the issues:

Once you add up ALL of their assets and liabilities, you get a value of $4.98 per share. This includes EVERYTHING they own and owe (including the real estate, their subsidiaries and cash which includes $25 million of cash which they don't actually own - it is customer deposits). Heh, they own a bank which has a total of $25 million in deposits.

They are losing just as many lawsuits as they are winning.

They are losing money on everything except for their telecom unit (which is 99% of their business) and Zedge which squeaked out a $100,000 profit for the quarter. The telecom unit is dying a slow death. International calling cards are not a growing market. They are trying to replace that shrinking source of income.

Oh, and they gave away 10% of their holdings in Straight Path to their CEO at the end of last year and are spinning it off soon so he can make a nice profit selling it on the open market.

Oh, and here is a nice write-up of the company: http://seekingalpha.com/article/1530...n-off-catalyst

yea one thing that worries me about skullcandy is that so far the higher end headphones have been mediocre. Which might have scared of a bunch of customers. And they also didnt manage to capture a decent marketshare in europe. The brand has been around longer then dre beats, and for some reason i see the latter everywhere here in europe, unlike skullcandy. i supose because its so cheap and still somewhat early there might be something left there. But i like headphones (own like 3) and i wouldnt buy any of them.

Sorry for poor formatting from copying this from excel

Here is adjusted EBITDA for the last 7 quarters just from the telecom business, which as you said is ~98% of revenue.

Telecom revenue:
369 358 372 378 392 403 389


adjusted EBITDA
8 8 10 10 12 13 13

Here is the EBITDA margin for those same quarters:
2.11% 2.35% 2.63% 2.70% 3.04% 3.33% 3.34%

As you can see revenue is basically flat or slightly increasing, while margins are actually getting better as more of their revenue is derived from higher margin retail and payment services vs wholesale.

IMO the telecom business is perceived as dying, "who uses calling cards anymore?", while in fact is pretty stable. This is part of why it may be undervalued.

The rest of the company granted is more like a collection of technology start-ups, which I feel you gives you that upside. There aren't many 200m$ companies with solid earnings and several potentially very valuable technology companies within.

I will look into the bank thing, I didn't know that.

Good luck.

skullcandy earbuds are terrible quality fwiw

confirmed. Only took me 2 pairs to figure that out

can someone explain if this is a scam, or if im jsut missing something here.
http://www.kingoldjewelry.com/s/ProductOverview.asp
A company that makes gold jewelry, it has growing income from 2011 to 2012. It has pretty much no debt. And here is the good (?) part, it has a PE ratio of 2 lol. Its market cap is 80 million.

Also a US listed chinese fruitdrink company:
http://www.marketwatch.com/investing/Stock/SPU
extremly low PE ratio. not that steady increasing sales, but at least they are really cheap and also almost debt free. One weird thing tho, that over 3 years ago someone infused over 30 million $ in the company , and that cash has just been sitting there idle.

what the hell does this mean. is it possible this company is used for shady stuff? I feel like im missing something here.

It's a Chinese microcap, so there's a very good chance that it's a fraud. I do not know of any way of telling if such companies are legit other than seeing if they pay dividends.

That isn't even good enough because "paid dividends" is not the same thing as "going to pay dividends."