Monday, April 2, 2012

New Energy Systems Group Reports Fourth Quarter 2011 Financial Results

What worries me is the amount of goodwill on the balance sheet. This year there could be another big impairment, frustrating EPS. Almost the half of Total Assets is Goodwill.............a bad sign!

I still own stocks in this company, but I have to confess that my confidence has reached the breaking point.

Press Release

Mr. Jack Yu, Chairman of New Energy stated, "We had a challenging year in several subsidiaries, including E'Jenie and NewPower which was one of the reasons we decided to divest of those business lines by selling them off last year. The weak of entire market forced other companies in 3C related products industry to seek more profitable products such as mobile power devices. This resulted in a significant increase in the number of competitors for Anytone® products, including a few large competitors with greater scale than Anytone® and several opportunists who counterfeited some of our faster moving products.   We have lost some orders as a result of these conditions, resulting in reduced sales starting near the end of second quarter. We also made a strategic decision to selectively reduce prices of several Anytone® products in order combat some of the counterfeit products."
Mr. Yu continued, "We expect to stabilize margins by introducing new, innovative products that carry higher margins and designed to service the fast-growing smart phone and tablet market in China. In addition, we have started to identify areas within our selling, general and administrative expenses where we can become more efficient.  We are, and will be committed to growing our distribution base by attending international trade shows and the many domestic, electronic trade shows in Hong Kong and China."

For the 12 Months Ended December 31

FY 2011
FY 2010

Net Sales
$51.5 million
$45.6 million

Gross Profit
$11.7 million
$12.9 million

Net Income (Loss) from Continuing Ops
($3.8) million
$5.2 million

Adjusted Net Income from Continuing Ops *
$ 6.5 million
$ 8.8 million

EPS from Continuing Ops (Diluted)

Adjusted EPS from Continuing Ops (Diluted)*

*Adjusted net income and adjusted EPS from continuing operations exclude $0.8 million of non-cash stock-based compensation expenses during twelve months end of December 31, 2011, $2.0 million of amortization expenses and a $7.4 million impairment of goodwill.

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