Tuesday, August 19, 2008


DFNS came out with their 10Q report on friday...

A few things.....

1. It looks like they lost some of the backlog orders with the Israel Defense Ministry which is bad news. They did get an additional $1.6 million order it looks like though.

2. They said that the IDM orders should remain steady so I would figure $1.2-$1.6 million each quarter for the next couple quarters.

3. Local civilian and Export Military were both up a good deal which helped.

4. They aren't making money on their existing business. The reason they had a profit was due to a payment from the Israel gov't for leaving a couple years back.

5. in 2006 and prior basically this was a company that did $10 million a year and EPS was anywhere from (.03) to .01. Are we going back to that type of stock and was 2007 just a fluke?

6. 2008 will be more than $10 million but FAR less than last years $19 million. Probably in the $14+ million range I would guess.

7. I don't understand why they would take a $250k loan when they got the cash. I know the cash didn't come until later but $250k shouldn't need that and then they got another one they didn't utlize. And why post a NT 10Q and than a few hours later post the 10Q?

8. Personally I think its run like a mom and pop type deal. The CEO owns most of the shares so he controls everything and don't really care that much about the other 30% or so. If they did why not announce the $1.6 million IDM order?

9. Its a nice book value but they aren't doing enough to MAKE $$$ and not telling their story to anyone to get the share price up.

10. "Since January 2008, we have experienced an increased demand for armored vehicles, from central and south African countries. We believe that the armor car business is growing and will become even more significant for us by the end of 2008. The armor car business is characterized by higher gross margins than our traditional military products. " (PAGE 13)
So Maybe that will mean a couple million in revenue from that this year.

11. an $1.7 million increase in inventories in order to support future sales, new product lines and also reflects the production of a significant amount of finished and semi finished products that were delivered at the beginning of the third quarter," (PAGE 18)
So maybe we will get an UPWARD suprise for Q3?

DFNS didn't trade much on Monday. From this report I don't see any RUSH to buy the stock at these levels. I think it could pop to the .40's but ONLY if they announce some news. And the company don't seem to want to do much of that.
It could fade to the lower .20's and maybe even teens I don't know. At these point they have still lost .01 for the year based on continued operations and their margins haven't improved so I don't know that they will breakeven or earn a penny or two for the year but not much more.

Part of me wants to just dump it and be done with it. If the book value wasn't in the low .40's I probably would. But since the book is over .40 I am not going to dump it in the low .20's. They also have a decent amount of cash for a company this size just depends on what they do with it.

Its always up to you what you want to do with it. At this point I am staying with it, disappointed yes but going to stick it out for a while yet.

Next earnings release won't be until mid November. So unless the company comes out with additional news you won't hear from them for about 3 months.


TATTF came out with their report as well.

They don't have a 10Q I guess cause they are an Israel company so they only come out with revenue earnings etc..
They made a little more revenue but not as much profit.
Still they have .44 for the year so far and I think .80 isn't out of the question.
At 10x P/E its an $8 stock.

I wish they put in their stockholder equity as I think its close to $10 but I am not sure.

TATTF went up after the intital report and went down Monday. I think its a $8-$10 stock in the next few months.


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