Yaw. You're right I am "downunder" as they say. You know my thoughts on this year. I think that it will be hard for them to achieve the forecast of 0.76p. If this is the case (and I hope I'm wrong) then they will have to issue a profit warning in the Jan trading statement. On the other hand they must have believed that they could get there to let Seymours publish the new forecast.
As for the following year. I don't know. As well as all of the issues that have been discussed numerous times on this board I think there are a couple of other problems.
1. There is no doubt that there is a general market disinterst in small caps at the moment. This is part of the normal cycle, influenced by the outlook for the domestic economy. With the outlook improving (in GDP terms) interest in small caps may improve.
2. The market punishes companies which continually disappoint and I think AMU is now firmly in that category, unfortunately. It is going to need a sustained period of exceeding market expectations to achieve a proper rating.
3. The market for DVD's is maturing (and DVD's are now the bulk of AMU's business). I heard a news item a while ago which indicated that the pundits thought that the DVD business would grow by about 10% this year. This is still reasonable growth but slowing considerably from the growth rates of previous years. As with any maturing market, competition increases and margins erode. Redworth is a slick operation and I believe that they may still be able to achieve good growth by increasing market share. They may also benefit by being able to purchase redundant stock more easily and at better prices. Whatever happens there is no doubt it is going to get tougher. I think that they now need to make some strategic acquisitions, more along the lines of Maximum ie: where they can differentiate themselves and minimise competition. Unfortunately, their financial position and SP performance precludes anything large and significantly material.
Enough ramblings. It's been an interesting year on this Board - for me it's been great to discuss these issues with (mostly) people in the samer boat as myself, although I have wondered at times if we have not all been guilty of collective delusion (not to mention conspiracy theorising- jess!) Hope you all have a fantastic Christmas and lets hope that 2006 turns out to be a much more prosperous year for AMU holders than 2005 (and may God heap lots of margin calls on all shorters).
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