APRIL 2008 W4 ALERT
Syntax-Brillian Loses Shine with Multiple News Releases
Company Breaks News of Possible Financial Restatements, New Job Cuts and Other Retrenchments
<April 18, 2008>Syntax-Brillian Corporation, previously a rising industry star with innovative video products and technologies, late Friday put out several news releases indicating the company continues to struggle with several issues. The company sells products primarily under the Olevia (LCD HDTVs) and recently acquired Vivitar (digital still and video cameras) brand names.
>Possible Financial Restatement
The Company has announced that its Audit Committee is carefully analyzing the accounting treatment of several previous transactions. Preliminary findings by the committee indicate that the company’s financial statements for the fiscal year ended June 30, 2007 (as well included interims)…and financial statements for the first fiscal quarter of 2008…may require restatement and should not be relied upon in evaluating the company’s performance.
The issues appear to center around accounting treatment of transactions related to tooling deposits with a manufacturer as well as “certain sales transactions with the Company’s Asian distributors.” No further details were provided.
>Job Cuts and Operational Streamlining
The company also announced that they were instituting several “strategic initiatives” designed to better position the company for growth. These initiatives include a significant staff reduction that will yield a reduction of twenty percent in overhead costs or a savings of approximately $4 million.
In addition to the staff cuts, the company will simplify its supplier network for both the Olevia and Vivitar brands. According to the company, a new relationship with Compal Electronics will provide “supply chain management, continuity, engineering expertise and manufacturing proficiency.”
And finally, Syntax-Brillian announced its intention to reduce or “streamline” the number of retail customers with whom it does business. Currently, the company says that they have 3,000 retail and online partners. While they don’t identify the amount of reduction, the company says clearly that they will focus on those partners offering “growing long-term relationships.”
In a separate report from the Associated Press, the company was said to be having trouble “financing its operations in the face of declining TV sales.” Shares of Syntax-Brillian stock, the AP notes, have dropped 70% since the beginning of this year.
“Today we are taking the actions that are necessary to move Syntax-Brillian into the next stage of its growth,” said Syntax-Brillian President and CEO James Li. “By focusing on those customers that best match our brand attributes we can better position the Company for sustained controllable growth in the future.”