Southern Products Inc (OTC:SNPD) Searching for New Horizons
It all started back at the end of February when the first emails touting Southern Products Inc (OTC:SNPD) started flooding investors’ mailboxes. We did the research and we found out that SNPD are not very well off at the moment.
They are in the business of branding cheap Chinese TV sets that they import and sell on the US market. Unfortunately, they had some legal disputes with the suppliers which means that during 2012 their revenues have all but disappeared. The emails continued flying around from all directions and a couple of days later, SNPD themselves joined the party and announced that their CEO will travel to China so that he can negotiate a contract with new suppliers and he promised that this time he will make sure that the terms of the agreement are more favorable than before.
We were quite eager to see what the outcome of the negotiations have been but instead we continued to receive only the pumpers’ emails with all the “technical breakout” analyses that could sound all clever and interesting, but they are rather irrelevant to the shareholders and investors seeking a long-term option for their money. So it’s fair to say that we were counting on SNPD themselves to inform us how things are developing in China. Instead of this we got a couple of press-releases that left us a bit underwhelmed.
The first one states that they have now hired a new investor relations firm to help them with the communication with shareholders and the presentation of SNPD to the general public. That wouldn’t have been a bad call if they had the operations going and everything was okay in terms of revenues and profit but, unfortunately, that’s not the case.
While the sales registered during the three months that ended in November 2011 amounted to $1.3 million, during the same period of 2012 they were unable to meet customer demand, which means that the revenue figures have dropped down to just $10 thousand. In addition to this, they have just $66 in the bank and $2.4 million in current liabilities. In conclusion, we think that they would better focus on getting the revenues flowing once again rather than finding people who will help them write their press-releases in a more compelling way.
Still, they have thought about the operations as well. Certainly not in the way that we were expecting, but we see some movement which is always a good thing. Just a couple of hours ago they announced that they have reached an agreement with Westingtonhouse Digital Electronics according to which SNPD will start distributing Westingtonhouse’s refurbished TV sets. There is no mention if SNPD will continue the operations with their own Sigmac brand, but the company CEO, who, by the way was working for Westingtonhouse back in 2007, says that the potential for profit from the distribution business is much higher compared to what they have been doing so far.
Whether he is right or not, only time will tell and all we can do at this point is wish SNPD the best of luck.
Investors, however, are receiving the pumpers’ emails virtually non-stop and, judging by the way things are going now, just a couple of hours into the trading session, today will be a day with some massive volume. That doesn’t mean that the price will jump however as demonstrated by one of Stock Mister’s previous picks – QED CONNECT, INC. (PINK:QEDN), who got pumped on February 13. As you can see from the chart on the right, a lot of shares changed hands on that day, however, the fall in the price has certainly made some investors quite angry.
This could very well happen to SNPD which is why you should be extremely careful when making your decision.
