Thursday, May 15, 2008


Hi StockDoublers,

DFNS released their 10Q today after the bell. Actually WELL after the bell.

Anyway they dumped it on a friday for good reason it STINKS!!!

$3.1 million in revenue for Q1 and their margins are way DOWN.

They lost money for the Quarter. Its says .02 in the report but I don't know its right due to the figures I come up with.

Civilian Local was WAY up like 300k more than what they did any quarter last year but with all the revenue they LOST money on that sector.

Export Civilian was basically one customer last year for almost $600k. And in their report they said that person is doing their own product so they don't foresee much of any orders from them. SO $600K is gone for 2008.

Local Military was $1.3 million but that was roughly in line with what they said in their 10k report. Still way down from last years Q1.

Export Military was the most disappointing only $600k vs over $1 million last year and that should have been their STRONGEST growth sector.
But now they say for that sector that their growth will be based on pricing. In other words they have to sell their product for cheaper to get more business which means MARGINS will go down even more.

I think they need to spend some money on a calculator though cause their NT 10k was off on EPS they said .07 it ended up being less then .05. And now their first Q1 is weird #'s. I show them losing less than .01 but they have .02 loss.

On a positive side their backlog got larger from Dec 31st to March 31st. Mostly in export military to Africa/Asia so that is good.

As far as the stock price I wouldn't think this would be a good report by any means. But the loss isn't that much to recover from if its less than .01 which is what my figures show.

The book value is around .43 per share and they have a lot of cash. If they use it wisely it should be a good investment still. I think its still has limited LONG TERM downside. And I would pick it up again in the upper .20's if it got there and probably even at .30. Upside though I think is pretty limited as well unless some major orders come in or they buy back some stock or something. Personally I would probably sell all my shares for .60 even though that isn't close to a double. And I would be fine with it.

Crunching some of the #'s this is what I come up with for the year.
Their is NO WAY too tell if they will be profitable or not but I just based my figures on revenue.

They have $2.6 million IDM backlog and $2.2 million in recently announced orders due for 2008. If they get thru the backlog and $2.2 million that would be an additional $4.8 million for the year. I think their will probably be more orders (maybe announced or unannounced on IDM for an additional $900k)
So $2.6 +$2.2 + .9 = $5.7 million for the rest of the year from IDM. Plus the $1.3 for Q1 is $7 million for IDM for 2008.

Local Civilian was a huge $1.1 million I don't see it being that good going forward but doing $2.9 million the rest of the year for a total of $4 million Local Civilian.

Export Civilian I will say ZERO for the year. Anything here is a bonus as they lost their main customer for this last year.

Export Military $600k Q1. $2.4 million backlog for africa/asia/europe if they go thru that its $3 million total. That means basically no more orders just go thru the backlog.

So all together that would $7 million IDM, $4 million Civilian and $3 million export Military or $14 million in revenue for 2008.
Which is down from 2007 but probably realistic. If that is the case they will save $100k+ in not paying the president a bonus this year.

I am holding currently but if it pops up a bit I may unload some of my non StockDoubling project shares.

Steve Hoven

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